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Indian Cement Industry Analysis

March, 2020

India is the second largest cement producer in the world and accounted for over 8 per cent of the global installed capacity as of 2019. Cement production reached 334.48 million tonnes (MT) in FY20. The cement production capacity is estimated to touch 550 MT by 2020. Of the total capacity, 98 per cent lies with the private sector and the rest with public sector. The top 20 companies account for around 70 per cent of the total cement production in India.

The demand of cement industry is expected to achieve 550-600 MT per annum (MTPA) constantly by 2025 because of the expanding requests of different divisions, i.e., housing, commercial construction and industrial construction.

A total of 210 large cement plants account for a combined installed capacity of 410 MT in the country, whereas, 350 mini cement plants make up for the rest. Of the total 210 large cement plants in India, 77 are in the states of Andhra Pradesh, Rajasthan and Tamil Nadu. Sales of cement in India stood at Rs 58,407 crore (US$ 8.29 billion) in 9MFY20. India’s export of cement, clinker and asbestos increased at a CAGR of 6.44 per cent between FY16-FY19. In FY20 (till January 2020), it reached US$ 1.66 billion. To enhance the source of capital for infrastructure financing, Credit Guarantee Enhancement Corporation, for which regulations have been notified by the RBI, will be set up in FY20.

According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), cement and gypsum products attracted Foreign Direct Investment (FDI) worth US$ 5.28 billion between April 2000 and March 2020.

The Government of India is strongly focused on infrastructure development to boost economic growth and is aiming for 100 smart cities. The Government also intends to expand the capacity of railways and the facilities for handling and storage to ease the transportation of cement and reduce transportation cost. These measures would lead to an increased construction activity, thereby boosting cement demand. As per Union Budget 2019-20, the Government expected to upgrade 1,25,000 kms of road length over the next five years, which would boost the demand for cement.

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