CHENNAI: With the infrastructure sector enjoying top priority status under the Narendra Modi-led government at the Centre, the cement industry is poised to witness robust growth in the coming years. India is the second biggest producer and consumer of cement in the world and the total cement production in the country touched 282.79 million tonnes in 2016. Domestic cement consumption grew 15.7 per cent CAGR during FY11-17 beating the cement production in India, says a recent note by IBEF.
This presents a tremendous opportunity as well as a challenge. According to estimates, India will need as much as 550-600 million tonnes of cement by 2025 to keep up with the various ambitious infrastructure-building targets set by the government. At the moment, there are 188 large cement plants accounting for 97 per cent of the total installed capacity and 365 small plants that make up for the rest. The top 20 cement companies account for 70 per cent of the total production in the country. Andhra Pradesh, Tamil Nadu and Rajasthan account for the bulk of the cement plants in the country.
According to IBEF, the key drivers for the rise in demand for cement are the affordable housing sector, infrastructure growth such as the dedicated freight corridors, airports and ports, commercial real estate growth, smart cities, Swachh Bharat scheme, development of metro rail in key metropolitan cities in Mumbai, Bengaluru and Hyderabad, and the rapid urbanisation of the present Indian cities.
The housing sector accounted for 67 per cent of the total cement demand due to growing urbanisation, higher employment and easier access to credit for home buyers and banks’ willingness to focus on this particular target group.
The government also plans to increase the infrastructure investment to $1 trillion in the 12th Five year plan (2012-17). Since more people are gravitating towards cities and urban areas in search of jobs, the population in and around urban areas is set to increase and the government plans to develop 500 cities with a population of more than one lakh.
With the GST slated to be implemented in July, the cement sector at 28 per cent slab is expected to see subdued growth. However, given the infra push by the government, it remains one of the brightest sectors in the Indian economy.
Cement industry geography-wise
South - Tamil Nadu, Andhra Pradesh, Karnataka - 132.7 mtpa
North - Rajasthan, Punjab, Haryana and NCR- 85.6 mtpa
East - West Bengal, Orissa, Jharkhand, Chhattisgarh 49.4 mtpa
West - Maharashtra, Gujarat - 57.6 mtpa
Central - Madhya Pradesh and Uttar Pradesh- 52.8 mtpa