Opportunities for Regional Players are Opening up in India’s Booming Cement Industry

After the deregulation of the Indian cement industry in 1982, it has continued to expand consistently. India’s economic development is correlated with the expansion of the cement industry there. India’s expanding infrastructure and real estate investment, like that of any other emerging nation, is driving up demand for cement. 

With a total production of 390 million tonnes in FY 23, India has a cement production capability of about 550 million metric tonnes. According to The India Watch‘s analysis, between FY 12 and 23, cement production in India increased at a CAGR of 4.9%. After China, the South Asian economy has the second-largest global cement market. 

Infrastructure accounts for 25% of demand, with the real estate industry providing 65% of it. Industrial expansion governs the market that is still in existence.

Until now, a small number of dominant companies had controlled the Indian cement sector, including Ultra Tech, CCI (PSU), Dalmia, Birla, JSW, Adani, Orient, etc. 70% of India’s aggregate cement production is made up of top 20 businesses. Around 450 other smaller and mid-sized businesses manage the remaining output.

Factors Affecting India’s Cement Production

Cement production in India is influenced by several factors, including those listed below:

  • After the pandemic, the Indian real estate market is quickly recovering. It is rising for both residential and commercial purposes. According to projections, Indian real estate will be worth USD 1 trillion by 2030.
  • India has a vast population, making real estate a vital industry. Some of the key growth factors for real estate include the nation’s youthful demographics, rising per capita income, and expanding population. Indian real estate continued to grow even during the pandemic despite a decline in demand.
  • The Indian government is making significant investments in the infrastructure sector, which includes 100 smart cities, dedicated freight routes, rail networks, metro networks, airports, ports, and urban transit systems, among other things. By 2025, India will invest USD 1.4 trillion to upgrade its infrastructure. This will accelerate India’s need for cement.
  • The National Highway Authority of India (NHAI) intends to construct a network of highways totalling 200,000 km by 2024 as part of the Bharatmala Yojna. Similarly, the nation is actively constructing feeder lines, rural roads, feeder networks, and bridges.

The Indian Cement Industry’s Challenges

  • Despite being closely tied to the expansion of infrastructure and the country’s overall economy, the Indian cement sector nevertheless faces several obstacles.
  • The main source of India’s Greenhouse Gas (GHG) emissions is the cement sector. Approximately 8% of the nation’s total GHG emissions come from this sector. The use of electricity, burning of fossil fuels, and calcination of limestones all contribute to the greenhouse gas emissions in the cement business.
  • Despite notable advancements in the past, India uses roughly 200–235 kgs of cement per person annually. While countries like China boast a per capita average of over 1000 kg, the worldwide average is only 500 kg.
  • It is likewise difficult to ward off demand cyclicity in the cement industry. Since the sector is heavily dependent on other industries, including real estate, transportation, and infrastructure, a potential slowdown in those industries will impact India’s need for cement.

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