Sri Lanka recently slashed tariffs on Indian imports under a bilateral trade deal, but said Monday it would exclude top import good cement for at least the next two years, to protect local industry.

Sri Lanka was required to cut tariffs on Indian imports by up to 70 percent on the customs duty rate this year, and accordingly slashed tariffs in mid September.

Sri Lanka’s finance ministry said however, that it had exempted bulk cement imports from the duty cut, to protect the local cement manufacturing industry and prevent cheap Indian imports from flooding the market.

“The duty structure for bulk cement imports has not changed,” an official with the Department of Trade, Tariffs and Investment policy at the Treasury, told LBO.

Accordingly, three bulk categories – waterproof cement and boiler cement, Portland cement in packaging of 50kg and less and Portland cement in packaging of over 50kg, have been exempt.

Other grades of cement - like cement clinker, aluminous and hydraulic cements will see tariffs reduced by up to 70 percent, the Treasury official said.

Over 50 percent of Sri Lanka’s total imports of 500,000 metric tonnes of cement are from India, with over 90 percent of that in bulk form, Sri Lanka’s commerce department says.

India and Sri Lanka agreed six years ago, that cement would remain a sensitive good, leaving it up to the Sri Lankan government, how it would phase out tariffs.

The protection however is short-lived, with all imports of cement to be zero-rated or become duty free by 2008, along with about 2000 other goods that are not on a protected negative list.

Sri Lanka’s annual demand for cement is around 3.5 million metric tones, with the island’s largest cement maker Tokyo Cement, supplying around 30 percent of the market.

Holcim Lanka Ltd also has a significant presence in the local market, with Ceylon Ambuja Cement, owned by Indian giant Gujarat Ambuja Cement, among the top importers from India.

India has lowered all trade barriers with Sri Lanka as agreed under the Indo-Lanka free trade agreement in 2003, except for 400 odd goods on its negative list