In a moved aimed at bringing inflation under control, the government cut customs duty on 11 product categories, including portland cement, capital goods, project imports and raw materials, late Monday night.

While the duty on portland cement has been cut from 12.5 per cent to nil, the duty on stainless steel has been reduced from 7.5 per cent to 5 per cent, on specified capital goods from 12.5 per cent to 7.5 per cent and on primary semi-finished base metals from 7.5 per cent to 5 per cent.

Fuelled by a rise in the prices of foodgrain, cement and base metals, inflation rose to a two-year high of 6.12 per cent for the week ended January 6, leading to expectations of an interest rate hike when the Reserve Bank of India reviews its monetary policy at the end of the month. Finance Minister P Chidambaram had called it a cause for concern.

The government has also reduced the duty on project imports from 12.5 per cent to 5 per cent. Significantly, it has extended the project import rate of 7.5 per cent to airport development projects and Metro rail projects.

In addition, it has cut the duty on organic chemicals like halogens, sulphur, carbon, hydrogen and alkali metals from 10 per cent to 5 per cent, on carbon black feedstock from 10 per cent to 5 per cent and on refractories from 7.5 per cent to 5 per cent.

Reacting to the duty cuts, some industry representatives said they could impact their finances. PM Balasubramaian, executive director in charge of SAIL's Salem Steel Plant, said it would make imports cheaper and so affect Salem's bottomline.