Last Updated: July 15, 2014
Updated: June, 2014
SECTORAL REPORT | April, 2014
Cement is one of the core industries and plays a vital role in the growth and development of a nation. The cement industry of India is the second largest producer in the world. The production of cement has increased at a compound annual growth rate (CAGR) of 9.7 per cent to reach 272 million tonnes (MT) during FY 06–13. The production capacity is expected to grow to 550 MT by FY 20.
India's potential in infrastructure is huge. The country is expected to become the world's third largest construction market by 2025, adding 11.5 million homes a year to become a US$ 1 trillion a year market, according to a study by Global Construction Perspectives and Oxford Economics.
Notwithstanding its current position as one of the leaders in cement production, India’s riches in the sector remain somewhat untapped. “Lafarge's India business has been very successful and the country is among the top 10 markets globally for Lafarge. But going forward, we should rank higher because of the potential of the Indian market,” says Mr Martin Kriegner, CEO of the Indian branch of the world’s largest cement manufacturer, Lafarge.
India is among the best cement markets in Asia, according to Switzerland-based cement major Holcim. The company operates in India through group companies ACC and Ambuja Cements.
The Indian cement sector is expected to witness positive growth in coming years, with demand set to increase at a CAGR of more than 8 per cent during 2013–14 to 2015–16, according to the latest RNCOS report titled, ‘Indian Cement Industry Outlook 2016’. The report further observed, after analysing the regional trend of cement consumption, that the Southern region is creating maximum demand, which is expected to increase in future.
The cement industry has been expanding on the back of increasing infrastructure activities and demand from the housing sector over the past many years. According to data released by the Department of Industrial Policy and Promotion (DIPP), cement and gypsum products attracted foreign direct investment (FDI) worth Rs 13,370.32 crore (US$ 2.24 billion) between April 2000 and February 2014.
Some of the major investments and developments in the Indian cement industry are as follows:
The housing segment accounts for a major portion of the total domestic demand for cement in India. The Government of India is strongly focused on infrastructure development to boost economic growth and plans to increase investment in infrastructure to US$ 1 trillion in the 12th Five Year Plan (2012–17). During the Plan, the industry is estimated to add a capacity of 150 MT.
Some of the major initiatives taken by the Government of India to boost the Indian cement industry are as follows:
The cement industry in India is globally competitive as the industry continues to witness positive trends such as cost control, continuous technology upgradation and increased construction activities.
India’s cement industry needs to nearly double its manufacturing capacity by 2025, according to a report titled ‘Cement Vision 2025: Scaling New Heights’ by the Confederation of Indian Industry (CII). The report highlights that an additional capacity of 330–380 MT in cement and 240–270 MT in clinker could be needed by 2025. This translates into an investment of close to Rs 300,000 crore (US$ 50.1 billion).
In addition, major cement manufacturers in India are also increasingly using alternate fuels, especially bioenergy, to fire their kilns. This is not only helping to bring down production costs of cement companies, but is also proving effective in reducing emissions.
With the ever-increasing industrial activities, real estate, construction and infrastructure, in addition to the onset of various Special Economic Zones (SEZs) being developed across the country, there is a demand for cement.
Exchange Rate Used: INR 1 = US$ 0.0156 as on May 12, 2014
References: Media Reports, India in Business, Cement Corporation of India, Department of Industrial Policy and Promotion (DIPP), Cement Manufacturers Association (CMA)
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.