Last Updated: August 16, 2017
Last Updated: February, 2018
SECTORAL REPORT | February, 2018
India is the second largest producer of cement in the world. No wonder, India's cement industry is a vital part of its economy, providing employment to more than a million people, directly or indirectly. Ever since it was deregulated in 1982, the Indian cement industry has attracted huge investments, both from Indian as well as foreign investors.
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. Some of the recent major c such as development of 98 smart cities are expected to provide a major boost to the sector.
Expecting such developments in the country and 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 the raw materials for making cement, such as limestone and coal.
The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption in India. The other major consumers of cement include infrastructure at 13 per cent, commercial construction at 11 per cent and industrial construction at 9 per cent.
India’s total cement production capacity is nearly 425 million tonnes, as of September 2017. The growth of cement industry is expected to be 6-7 per cent in 2017 because of the government’s focus on infrastructural development. The industry is currently producing 280 MT for meetings its domestic demand and 5 MT for exports requirement. The country's per capita consumption stands at around 225 kg.
The Indian cement industry is dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the total cement production of the country. A total of 210 large cement plants account for a cumulative installed capacity of over 350 million tonnes, with 350 small plants accounting for the rest. Of these 210 large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.
On the back of growing demand, due to increased construction and infrastructural activities, the cement sector in India has seen many investments and developments in recent times.
According to data released by the Department of Industrial Policy and Promotion (DIPP), cement and gypsum products attracted Foreign Direct Investment (FDI) worth US$ 5.25 billion between April 2000 and September 2017.
Some of the major investments in Indian cement industry are as follows:
In order to help the private sector companies thrive in the industry, the government has been approving their investment schemes. Some such initiatives by the government in the recent past are as follows:
The eastern states of India are likely to be the newer and virgin 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 gray 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 exports and will logistically be well armed to face stiff competition from cement plants in the interior of the country.
Due to the increasing demand in various sectors such as housing, commercial construction and industrial construction, cement industry is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by the year 2025.
A large number of foreign players are also expected to enter the cement sector, owing to the profit margins and steady demand. In future, domestic cement companies could go for global listings either through the FCCB route or the GDR route.
With help from the government in terms of friendlier laws, lower taxation, and increased infrastructure spending, the sector will grow and take India’s economy forward along with it.
Exchange Rate Used: INR 1 = US$ 0.015 as of January 04, 2018.
References: Media Reports, Press releases, Union Budget 2017-18, Edelweiss Securities Ltd.
Notes: # – ‘India Cement’ report by Nomura Research dated October 13, 2015
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: August 16, 2017
The Indian Government announced the mid-term review of Foreign Trade Policy 2015-20 on December 5, 2017. Overall, the policy is expected to make Indian exports more compe...
In today's age, it's sometimes easy to forget that the internet is not just for networking and entertainment. It has a purpose and a vast reach; when used correct...
Held at two separate venues in 2018, the Auto Expo is India’s largest auto gathering. The Auto Expo 2018–Vehicles is scheduled to be held at India Expo Mart, ...
As the Indian real estate and infrastructure sectors look towards a greener future, the investment opportunities are promising and plentiful.In recent years, India has em...
From being labeled the ‘Fragile Five’(a term coined Morgan Stanley to represent emerging market economies)in 2013 to become one of the most favored investment...
Smartphones have been taking the world by storm. Look at the mobile phone advertisements and you will know what we are talking about. While earlier mobile phone advertise...
The Voice of Indian Innovation
Ajit Narayanan, an electrical engineer from Indian Institute of Technology Madras (IIT Madras), is the inventor of Avaz, India's first augmentative and alternative communication device for children with disabilities. It all began when he started working with Vidyasagar, a school for children with special needs, in Chennai.