The cement demand in India is exhibiting a CAGR of 5.65% between 2016-22. As India has a high quantity and quality of limestone deposits through-out the country, the cement industry promises huge potential for growth. India has a total of 210 large cement plants, of which 77 are in Andhra Pradesh, Rajasthan, and Tamil Nadu. Nearly 32% of India’s cement production capacity is based in South India, 20% in North India, 13% in Central, 15% in West India, and the remaining 20% is based in East India. India’s cement production is expected to increase at a CAGR of 5.65% between FY16-22, driven by demands in roads, urban infrastructure and commercial real estate. India’s cement production was expected to range between 380-390 million tonnes in FY23, a growth rate of 8-9% year-on-year (yoy).

Between FY12 and FY23, the installed capacity grew by 61% to 570 MT from 353 in FY22. The Indian cement sector’s capacity is expected to expand at a compound annual growth rate (CAGR) of 4-5% over the four-year period up to the end of the FY27. It would thus begin the 2028 financial year at 715-725 MT/ year in installed capacity.

India’s cement production for FY24 is expected to grow by 7-8% driven by infrastructure-led investment and mass residential projects.

The consumption of cement in India is expected to grow at a CAGR of 5.68% from FY16 to FY22. As per Crisil Ratings, the Indian cement industry is likely to add ~80 million tonnes (MT) capacity by FY24, the highest in the last 10 years, driven by increasing spending on housing and infrastructure activities.

Cement consumption is expected to reach 450.78 million tonnes by the end of FY27.

Cement Industry is distributed across the country in the form of Clusters depending primarily upon the availability of Limestone in a region.  Major Cement clusters includes Satna, M.P., Gulbarga (Karnataka), Yerraguntla (A.P.), Nalgonda (Telangana), Chandrapur (Maharashtra) and Chanderia (Rajasthan)

Long term and continuous efforts to reduce the energy consumption of Indian Cement Industry reaped the benefits in terms of Cost Savings, Lower Carbon Footprints, higher profit realisation and global acknowledgements on being environment friendly business operation.

India is the second-largest producer of cement in the world. It accounts for more than 8% of the global installed capacity. 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. Furthermore, on the back of rising rural housing demand, the consumption of cement in India has been growing consistently as it is one of the cheapest products to buy in terms of Rs./kg. Strong expansion of the industrial sector, which has fully recovered from the COVID-19 pandemic shock, is one of the main demand drivers for the cement industry. As a result, there is a strong potential for an increase in the long-term demand for the cement industry. Some of the recent initiatives, such as the development of 98 smart cities, are expected to significantly boost the sector.

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 raw materials for making cement, such as limestone and coal.

Currently, the installed cement capacity in India is 553 MTPA with a production of 298 MTPA.

In 1948, the government adopted the Cement Expansion Scheme, which envisaged new factories to increase production. New factories were established at Bagalkot, Jaipur, Orissa, Travancore, etc. In 1950–51, there were 22 operating units with an installed capacity of 3.3 million tons. Cement industry was given great importance in all the initial five-year plans. The target of the first five-year plan was to raise the installed capacity to 5.4 million tons which were achieved. The industry has grown manifold since then.

Cement production reached 329 million tonnes (MT) in FY20 and is projected to reach 381 MT by FY22. However, the consumption stood at 327 MT in FY20 and will reach 379 MT by FY22. The cement production capacity is estimated to touch 550 MT by 2020.  Sale of cement in India stood at Rs 58,407 crore (US$ 8.29 billion) in 9M FY20.  As of 2020, there are 264 Cement Manufacturing Plants situated in India.

India is the 2^nd largest cement producer in the world which is accounting for over 8% of Global Installed Capacity as of 2019.  With the installed capacity of  500 Tonnes Per Annum, India is producing 298 MTPA every year and produced 304.20 MTPA during the year 2018-19.  During the year 2018-19, India has exported the cement for the value of  434.96 US$ Million.

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.

India’s Trade in 2022-23  

1. Cement when mixed with water, it can bind sand and gravel into a hard, solid mass called concrete.
2. Cement is manufactured by using the Minerals / Raw Materials such as limestone, Gypsum, Clay, Sand, Coal and iron ore. Indian Cement Industry had the installed capacity of 500 Tonnes Per Annum.
3. Cement is manufactured by heating a precise mixture of finely ground limestone, clay and sand in a rotating kiln to temperatures reaching 1450ºC.  The cement clinker emerges from the kiln, is cooled, and then finely ground to produce the powder we know as cement.
4. During the year 2022-23, India’s export of Cement, Clinkers and Asbestos Cement Products is valued at USD 715.44 US$. India is the second largest cement producer in the world and accounted for over 8 per cent of the global installed capacity. In April-October 2023 export of this sector stood at USD 459.49 Million.

The top 5 export destinations for India are Sri Lanka DSR, Maldives, Bhutan, Nepal & Saudi Arab.

• Reduction in carbon footprint.
• Adoption of Waste Heat Recovery System.
• Co-processing of alternate fuels.
• Environment related Challenges.
• Quality related Challenges.
• Non-existence of Polluter Pays Principle.
• Issues related Municipal Solid Waste.
• Suitable Refractory for High % TSR,
• Consumption of Bypass dust with High % TSR, Fuel availability (Coal).
• Upgradation of dust control technology at old cement plants.
• Control of NOx emissions. Control of SO2 emissions.
• Renewable Energy like Solar, Wind, etc.
• Reduced clinker factor by increased use of other materials in making of cement blends. Cement manufacturing offers a value-added option to gainfully utilize industrial wastes generated by Non-ferrous industries like Copper, lead-zinc smelters, Refineries and mineral processing industries. Industrial Wastes can be used as blending material at the clinker grinding stage during manufacturing process which will substantially reduce heat consumption and mitigate CO2 emission levels to the extent of additional levels used.
• Logistics: Distribution cost to the end user is a major factor in the landed cost of Cement. Proposal to the Railways Dept., that there should be a subsidised Policy for export from the Plant to Port.  Logistic cost plays a vital role in India, of course those who are having coast based plants, there have little more advantage, but we need to promote exports for the other areas also like Inland Factory. When inland factory reaches to the Port, there is huge rate of cost involved either by Road or by Train or by Concor Wagon.  Therefore, we need to propose to railways that there should be a Subsidised Policy for the exports from Plant to Port. So that at least to some extent, competitiveness comes for Indian Product.
• Private Port Cost is high. Negotiating and bringing down the Port Charges. We have Government Ports as well as the Private Ports.  Private Ports recently come up with large capacity with good facility, but unfortunately we have high cost.  There also we need to have certain negotiation together with the Port Management to bring down the Tariffs. Because, like Cement and Clinkers all are bulk, we should get substantial concession on this product. We are not like small products where you can charge. This is very important issue.  Bringing down the port Charges is another major role.  We have to do it together with the Ports.
• Skill Gap and Lack of Industry & Academia Interaction. However despite the overall outlook being positive, the cement industry is facing a situation of over-capacity. This is also coupled with the interventions by the Competition Commission of India & the populist State Governments, which has led to pressures of not increasing prices despite the increase in cost of raw material & process fuel. Shortage of domestic coal & increasing cost of imported coal is also adding to the overall increase in production cost. On the other hand cost of electricity in India is higher compared to any of the peer countries & captive power plant is not feasible for smaller companies. The logistics cost for cement is also high since a lot of the cement is still transported through road transport which pushes the cost of cement. The current Railways capacity is not adequate enough for transportation. All of these are clouding to a situation of higher costs & lower margins especially for the weaker players in the short term. To increase the demand, cement prices have to be attractive for consumers. Higher prices always act as a disincentive & gives encouragement to substitute products to cement. However opportunity today for the cement manufacturers to reduce prices is low since by & large the cement industry is cost effective & profiteering is rare. One of the possible solutions to lower prices can be by reducing the current GST rates for cement which is quite amazingly clubbed with the luxury items slab. Cement being a mass consumable item & a product which is in sync with the progress of the nation through infrastructure & housing, the high rates may need a revisit.

Another unique situation for the cement brands have been the advent of numerous brands smaller or bigger which has led to an increase in competition & lower market shares for all players since it is the share of the same pie & the pie’s increase in size has been fairly slow. Hence for the numerous cement brands, branding & technical strategy becomes critical to get the share of mind of the consumers & the influencers. Cement being still a low involvement category for the consumers & no substantial product differentiation among various brands, TOMA or Top of the Mind Awareness becomes paramount. Hence to increase TOMA the cement brands are spending more on branding which is also increasing the overall cost for the manufacturers.

With the advent of technology more & more consumers are today aware about the various brands available in the market. They have started to make their own brand choice decisions which have led to demanding the brand upfront to the retailers just like any other mass consumable brands, hence limiting the role of push strategy, the cost of which is lower than a pull strategy.