Indian Cement Industry Poised for Unprecedented Growth

India's cement sector is positioned for unparalleled growth, according to a recent report by PhillipCapital. Robust economic indicators, expansive infrastructure development, and a positive demand-supply equation are propelling this trend, with the report highlighting the sector's 'impulsive up-move' driven by strong infrastructure and housing demand, favorable government policies, and industry consolidation.

Data from the IMF and RBI forecasts India's GDP to surge between 6-7% annually. This growth is largely attributed to an increased demand for cement, essential for construction and infrastructure advancements. Government initiatives like the Smart Cities Mission, Bharatmala Pariyojana, PM Gati Shakti, and Housing for All are significantly boosting infrastructure expenditure, in turn, fostering cement industry growth.

The urban population of India is projected to rise to 50% by 2050 from 35% in 2025, spurring demand for both residential and commercial construction. Affordable housing initiatives and real estate expansion, aided by schemes such as Pradhan Mantri Awas Yojana (PMAY), are expected to bolster cement consumption. Increased disposable incomes among the middle class further drive the demand for private housing and urban redevelopment.

The report also emphasizes that major industry players are gearing up to accommodate this demand surge. Consolidation efforts, like Adani's acquisition of Ambuja and ACC, are poised to strengthen pricing power and operational efficiencies. The 2025-26 Union Budget is projected to sustain high capital expenditure, with Rs11.11 lakh crore earmarked in 2024-25, enhancing cement demand, PhillipCapital notes.

Cement demand is anticipated to grow at a CAGR of 6-8% from 2025-30, supported by stable raw material availability. However, potential risks such as the cyclical nature of the industry, volatility in input costs, and the possibility of stricter environmental regulations, present challenges.

(With inputs from agencies.)