Construction Mirror Article detail

India’s cement production for FY24 is expected to grow by 7-8% driven by infrastructure-led investment and mass residential projects.

India is the second-largest producer of cement in the world. It accounts for more than 8% of the global installed capacity. India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Furthermore, on the back of rising rural housing demand, the consumption of cement in India has been growing consistently as it is one of the cheapest products to buy in terms of Rs./kg. Strong expansion of the industrial sector, which has fully recovered from the COVID-19 pandemic shock, is one of the main demand drivers for the cement industry. As a result, there is a strong potential for an increase in the long-term demand for the cement industry. Some of the recent initiatives, such as the development of 98 smart cities, are expected to significantly boost the sector.

Aided by suitable Government foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A significant factor which aids the growth of this sector is the ready availability of raw materials for making cement, such as limestone and coal.

The Market Size: In 2023, the market size of India’s cement industry reached 3.96 billion tonnes and is expected to touch 5.99 billion tonnes by 2032, exhibiting a CAGR of 4.7% during 2024-32. As India has a high quantity and quality of limestone deposits throughout the country, the cement industry promises huge potential for growth. India has a total of 210 large cement plants, of which 77 are in Andhra Pradesh, Rajasthan, and Tamil Nadu. Nearly 32% of India’s cement production capacity is based in South India, 20% in North India, 13% in Central, 15% in West India, and the remaining 20% is based in East India. India’s cement production reached 374.55 million tonnes in FY23, a growth rate of 6.83% year-onyear (yoy).

Between FY12 and FY23, the installed capacity grew by 61% to 570 MT from 353 in FY22. The Indian cement sector’s capacity is expected to expand at a compound annual growth rate (CAGR) of 4-5% over the four-year period up to the end of FY27. It would thus begin the 2028 financial year at 715-725 MT/ year in installed capacity.

India’s cement production for FY24 is expected to grow by 7-8% driven by infrastructure-led investment and mass residential projects.

The consumption of cement in India is expected to grow at a CAGR of 5.68% from FY16 to FY22. India’s cement industry, as per CRISIL Ratings, plans to increase its capacity by 150-160 MT between FY25 and FY28, building upon the 119 MT annual capacity addition over the last five years, to cater to growing infrastructure and housing demands.

Cement consumption is expected to reach 450.78 million tonnes by the end of FY27.

Robust Demand:

• India’s cement production reached 374.55 million tonnes in FY23, a growth rate of 6.83% year-on-year (yoy).

• India’s cement industry, as per CRISIL Ratings, plans to increase its capacity by 150-160 MT between FY25 and FY28, building upon the 119 MT annual capacity addition over the last five years, to cater to growing infrastructure and housing demands.

Attractive Opportunities:

• Government schemes like the Pradhan Mantri Awas Yojana (PMAY) for affordable housing and PM Gati Shakti National Master Plan for infrastructure are driving cement demand. PM Gati Shakti’s focus on transport networks and PMAY’s expansion will further increase cement consumption in coming years.

Long - term Potential:

• Oligopoly market, where large players have partial pricing control.

• Low threat from substitutes. • Indian cement companies are amongst the world’s greenest cement manufacturers.

• With high allocation under the Union Budget 2023-24 for infrastructure, affordable housing schemes and road projects to fuel the economy, the domestic cement industry is poised for a volume surge.

Increasing Investment:

• FDI inflows in the industry, related to the manufacturing of cement and gypsum products, reached US$ 6.10 billion (Rs. 5.08 lakh crore) between April 2000-December 2023.

• National Infrastructure Pipeline (NIP) introduced projects worth Rs. 102 lakh crore (US$ 14.59 billion) for the next five years.

India is the world’s second-largest producer of cement in the world, and almost all large players have been rapidly adding capacities as they look to capture the continued growth in demand expected over the next few years.

Besides Birla and Adani, which are the dominant players, Dalmia Bharat, JK Cement and Shree Cement have also announced capacity expansion plans. The demand for cement in India is expected to grow at a sturdy pace supported by government-led spending on infrastructure and housing.

The overall cement industry in the country is likely to add 150-160 million tonnes of capacity in five years, as per CRISIL. In the last five years, cementmakers have added close to 120 million tonnes of capacity, taking the country’s total to around 600 million tonnes. More consolidation is on the cards for the cement sector.

Adani will not be able to catch up with UltraTech just by doing organic growth. It will have to make more acquisitions to gain market share.

There are reports of the Aditya Birla Group negotiating to buy the promoter’s stake in Orient Cement. Last year, Orient Cement was said to be in talks with the Adani Group for promoter stake sale.

In 2023, the market size of India’s cement industry reached 3.96 billion tonnes and is expected to touch 5.99 billion tonnes by 2032, exhibiting a CAGR of 4.7% during 2024-32.

As India has a high quantity and quality of limestone deposits throughout the country, the cement industry promises huge potential for growth.

India has a total of 210 large cement plants, of which 77 are in Andhra Pradesh, Rajasthan, and Tamil Nadu. Nearly 32% of India’s cement production capacity is based in South India, 20% in North India, 13% in Central, 15% in West India, and the remaining 20% is based in East India. India’s cement production reached 374.55 million tonnes in FY23, a growth rate of 6.83% year-onyear (yoy).

Between FY12 and FY23, the installed capacity grew by 61% to 570 MT from 353 in FY22. The Indian cement sector’s capacity is expected to expand at a compound annual growth rate (CAGR) of 4-5% over the four- year period up to the end of FY27. It would thus begin the 2028 financial year at 715-725 MT/ year in installed capacity.

The Government Intiatives:

In order to help private sector companies thrive in the industry, the Government has been approving their investment schemes. Some of the initiatives taken by the Government of late are as below:

As per the Union Budget 2023-24:

The government approved an outlay of US$ 32.57 billion (Rs. 2.7 lakh crore) for the Ministry of Road Transport and Highways which is likely to boost demand for cement.

Under the housing for all segment, in 2023-24 the budget estimate for Pradhan Mantri Awas Yojana is US$ 9.63 billion (Rs. 79,590 crore), a 66% rise from the last year’s budget estimate of US$ 6.43 billion (Rs 48,000 crore) in 2022-23.

As per Invest India, the National Infrastructure Pipeline (NIP) expanded to 9,305 projects from 7,400 projects.

Government schemes like the Pradhan Mantri Awas Yojana (PMAY) for affordable housing and PM Gati Shakti National Master Plan for infrastructure are driving cement demand. PM Gati Shakti’s focus on transport networks and PMAY’s expansion will further increase cement consumption in coming years.

In October 2021, Prime Minister, Mr. Narendra Modi, launched the ‘PM Gati Shakti - National Master Plan (NMP)’ for multimodal connectivity. Gati Shakti will bring synergy to create a worldclass, seamless multimodal transport network in India. This will boost the demand for cement in the future. The Union Budget allocated Rs. 13,750 crore (US$ 1.88 billion) and Rs. 12,294 crore (US$ 1.68 billion) for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission and Swachh Bharat Mission.

The key Highlights of the Article:-

• By 2030 India will be the world’s most populous nation and its third-largest economy. In a little over a decade, the country will undergo a unique and unprecedented transformation. The huge challenges brought about by this rapid pace of development will place a heavy responsibility on the shoulders of the Indian cement industry. To rise to this opportunity and cement its position as the leading partner for building a new India the industry will need to go beyond business as usual. It will need to adopt a new shared vision for the industry and work with the entire ecosystem to Build More, Build Well and Build Right

• To realize vision 2030 the Indian cement industry should make substantial investment in new greenfield capacity, embrace industry 4.0 and adopt more sustainable technologies.

• By 2030 the Indian cement industry will reach 660 MMT driven by growth in infrastructure and housing.

• The Indian cement industry will play a pivotal role in building a new India with cement demand poised to more than double by 2030. However, to translate this potential into reality the industry will need to adopt a new growth strategy.

• By 2030 the Indian cement industry will reach 660 MMT driven by growth in infrastructure and housing.

• To realize vision 2030 the Indian cement industry should make substantial investment in new greenfield capacity, embrace industry 4.0 and adopt more sustainable technologies.

• By 2030 India will be the world’s most populous nation and its third-largest economy. In a little over a decade, the country will undergo a unique and unprecedented transformation. The huge challenges brought about by this rapid pace of development will place a heavy responsibility on the shoulders of the Indian cement industry. To rise to this opportunity and cement its position as the leading partner for building a new India the industry will need to go beyond business as usual. It will need to adopt a new shared vision for the industry and work with the entire ecosystem to Build More, Build Well and Build Right.

• The Indian cement industry is destined to play a unique part in building the new India due to its important role in creating the infrastructure that drives growth, generating employment, contributing tax revenues, attracting foreign direct investment (FDI) in manufacturing, and ensuring environmentally sustainable development.

• In the years to 2030, cement-intensive infrastructure development will be key to sustaining the high-level of broad-based GDP growth that India requires to lift the livings standards of a population that will have passed 1.5 billion people. • In the process, the cement industry will generate much needed skilled employment across the country, particularly in areas away from large cities that currently suffer from a lack of good job opportunities.

• The high levels of investment that the Government will commit in the coming years to building a new India will be dependent on robust revenue streams. As the third largest contributor of tax revenues, a growing and successful cement industry is vital to financing a better future for the country.

Further, as India seeks global capital to accelerate ‘Make in India’, the cement industry’s strong long-term growth fundamentals will be a major attraction for FDI given the necessity to locate cement production close to the sources of demand.

Finally, a new India needs to be built sustainably if it is to deliver a better future for coming generations. In its position as both a major contributor of CO2 emissions but also a global leader in energy efficiency, Indian cement can be a beacon for best practice to other industries as the country strives to achieve its ambitious commitments to the Paris Agreement on Climate Change.

By 2029, the India Cement Market is expected to reach 404.11 million tons in terms of production volume, thanks to growth in the infrastructure segment. The report analyzes market dynamics by region and end-user industries.

India Cement Market Overview:

Between FY12 and FY23, the installed capacity grew by 61% to 570 MT from 353 in FY22. The Indian cement sector’s capacity is expected to expand at a compound annual growth rate (CAGR) of 4-5% over the four-year period up to the end of FY27. It would thus begin the 2028 financial year at 715-725 MT/ year in installed capacity.

According to the Reports:- Ratings agency Crisil forecasts that the operating profitability of cement producers will decline by around 15% year-onyear to around US$11/t in the 2023 financial year due to growing fuel costs. However, it added that a 17% growth in cement demand in the quarter from April to June 2022 would mitigate the impact of this. It expects that growth in the cement market in the 2023 year will be driven by non-residential sectors such as infrastructure development and commercial projects. By region, growth is anticipated to increase fastest in eastern regions, followed by central and southern regions but the northern and western regions could be more subdued. It added that any significant delay in the reduction of petcoke and coal prices or any company that was unable to increase its cement prices would add further pressure to the market.

The cement industry has extensive forward and backward ties to a country’s economy. The value proposition of the cement industry is even bigger for a rising and transitioning economy like India, given the huge infrastructural requirements of an expanding and urbanizing country, as well as its contributions in terms of direct and indirect jobs.

With the inauguration of many projects spanning manufacturing, housing, and education, the Indian government has emphasized its commitment to infrastructure development. The cement sector is at the center of all planned infrastructure development, and as one of the country’s eight essential industries, it offers a unique value proposition for laying the foundations for a new Indian.

The India Cement sector’s entire installed capacity is over 545 million tonnes per year, while 337 million tonnes of cement were produced in 2021- 22, indicating a capacity utilization of around 62%. The India Cement Industry, which is dominated by domestic market players, has been an initial step in terms of adapting to changing socio-economic and environmental paradigms, whether it’s through the adoption of new technology, higher environmental requirements, or repurposing waste from other industries.

The Rising Infrastructure PostPandemic:

The India Cement business, which accounts for about 7% of the global installed capacity, is the world’s second-largest cement industry, second only to China. It is also the fourth-largest revenue contributor to the exchequer and the secondlargest revenue contributor to the Indian Railways, contributing nearly US $7.14 billion (INR 50,000 crore) per annum to the government via taxes and levies, and about US $1.29 billion (INR 9,000 crore) per annum to the Indian Railways through freight.

India’s infrastructure and construction sectors have a lot of room for growth, and the cement industry is likely to profit greatly from it. Some recent initiatives, such as the development of 98 smart cities, are expected to provide the sector with a significant boost.

Several foreign players, including Lafarge-Holcim, Heidelberg Cement, and Vicat, have recently invested in the country thanks to favorable government policies. The ready availability of raw resources for creating cement, such as limestone and coal, is a crucial aspect that promotes the growth of the India Cement industry.

Emerging opportunities:

For cement businesses, the eastern states of India are likely to represent newer and undeveloped markets that could contribute to their bottom line in the future. In the next ten years, India may overtake China as the world’s leading supplier of clinker and grey cement to the Middle East, Africa, and other developing countries. Cement facilities near ports, such as those in Gujarat and Visakhapatnam, are expected to have a competitive edge for export and will be wellequipped logistically to compete with cement mills in the interior of the country.

The government also plans to increase railway capacity as well as handling and storage facilities to make cement transportation easier and less expensive. These steps would result in more construction activity, which would raise cement consumption. For example, the Union Budget gave Rs. 13,750 crore (US $1.88 billion) to the Urban Rejuvenation Mission: AMRUT and Smart Cities Mission and Rs. 12,294 crore (US $1.68 billion) to the Swachh Bharat Mission, respectively, and Rs. 27,500 crore (US$ 3.77 billion) to the Pradhan Mantri Awas Yojana.

*As the coronavirus disease (COVID-19) crisis takes over the world, we are continuously tracking the changes in the markets, as well as the purchase behaviors of the consumers globally and our estimates about the latest market trends and forecasts are being done after considering the impact of this pandemic.

The India cement market size reached 3,644.5 Million Tons in 2022. Looking forward, according to IMARC Group expects the market to reach 4,832.6 Million Tons by 2028, exhibiting a growth rate (CAGR) of 4.94% during 2023-2028.

Cement refers to a binding material obtained by grinding a mixture of clay and limestone. It is also manufactured using other materials, such as shale, clay, slate, chalk, silica, iron ore and blast furnace slag, which are heated at a high temperature to form a brick-like substance that is then grounded into fine powder to form cement. In India, cement is extensively utilized as a prime ingredient for building houses, roads, bridges and other public structures.

The India cement market is primarily driven by the significant rise in construction activities due to the rapid population expansion and a surge in the need for residential spaces. The development of mega infrastructural projects in the country, such as airports and roads, is also bolstering the growth of the market. Furthermore, with the growing environmental concerns, there has been a rise in the demand for green buildings. This has led to an increase in the sales of sustainable and green cement as it minimizes the CO2 emissions generated during the production process. Moreover, rapid urbanization and industrialization, along with the rising purchasing power of consumers, are some of the other factors catalyzing the market growth across the country.

A significant rise in the construction activities pertaining to the development of mega infrastructure projects.

Based on the type, the India cement market has been segmented into blended, portland, and others. Currently, Portland cement exhibits a clear dominance in the market.

Based on the end use, the India cement market can be categorized into residential, commercial, and infrastructure. Among these, the residential sector holds the majority of the total market share.

On a regional level, the market has been classified into North India, West and Central India, East India, and South India.

Indian Green Cement Market Overview

India Green Cement Market is estimated to witness robust growth by 2023, owing to significant growth in the building, construction and infrastructure industry which in turn propels the demand for Green Cement as a result of high emissions from Portland cement. The rising need of reducing the carbon emissions due to the heating of Clay, sand and pulverized limestone which are used for the manufacture of cement are likely to drive the growth of the market by 2023. Green cement does not require a lot of heating during its production, thereby reducing the carbon footprint. Additionally, the increasing use as a repair material in the construction industry coupled with growing popularity as a binder in waste water treatment will propel the growth of the market in the next five years. Moreover, the growing adoption of Green Cement in residential and commercial applications coupled with rising urbanization & industrialization will drive the growth of the market in the forecast period. Based on the application, the residential segment is anticipated to hold the largest market share by 2023, due to increasing constructions and rising demand for green and sustainable buildings.

The future of Indian cement is bright!

Despite the recent challenges, the Indian cement industry can look forward to a bright future. Kanvic’s Cement Demand Projection Model developed specifically for Indian Cement Review Vision 2030 shows that cement demand in India will increase by 116% by 2030 to 660 million metric tons (MMT) at a CAGR of 6.6%.

Demand for cement from infrastructure will grow at around 10% through to 2030 with the fastest growth coming from the Government’s ambitious Sagarmala programme. At the same time, roads will remain the biggest single source of cement demand from infrastructure as a result of the implementation of the Bharatmala programme and increasing adoption of concrete roads.

Although declining in share from around 60% today to 54% in 2030, the residential sector will continue to be the single largest contributor to cement demand. Housing’s demand for cement will continue to rise at close to 6% per annum as India’s population becomes increasingly urbanized and household size steadily falls. At the same time, the Government’s major push on Housing for All will stimulate near-term growth, particularly in rural housing.

Along with the shift toward infrastructure, the industry will also witness a move toward institutional and ready-made concrete (RMC) customers who predominantly buy in dry bulk rather than bags. This promises to shift the bargaining power from manufacturers to customers but also bring efficiency and cost savings for cement companies.

To meet the future demand for cement in 2030 the Indian cement industry will need to invest in 368 MMT additional capacity - an increase of 83%. This will not only require setting up new plants but also acquiring adequate land, securing raw material supplies and hiring additional talent.

The Road Ahead

The Indian government is firmly focused on infrastructure development to spur economic growth and is striving for full infrastructure coverage to establish smart cities. The government plans to increase the capacity of railways and the facilities for handling and storage to enable the transfer of cement and cut out on transportation costs. These measures are expected to result in increased construction activity in the country, thereby boosting demand for cement.

The eastern states of India are likely to be the newer and untapped markets for cement companies and could contribute to their bottom line in future. In the next 10 years, India could become the main exporter of clinker and grey cement to the Middle East, Africa, and other developing nations of the world. Cement plants near the ports, for instance, the plants in Gujarat and Visakhapatnam, will have an added advantage for export and will logistically be well-armed to face stiff competition from cement plants in the interior of the country. India’s cement production capacity is expected to reach 550 MT by 2025. A number of foreign players are also expected to enter the cement sector owing to the profit margins and steady demand.