MUMBAI: The cement industry is on an expansion spree which will result in fresh grinding capacity addition of 160-170 million tonnes between fiscals 2026 and 2028 -- a 75 per cent rise over the 95 mt added in the past three years. It will pump in as much as Rs 1.2 trillion -- 50% more than the previous three years -- as demand continues to be strong and capacity utilization is near-full, said a report on Wednesday.
While this will entail substantial capex, the risks associated will be lower as a sizeable augmentation is brownfield (as much as 65%) and the majority of them will be funded from healthy operating cashflows, said Crisil Ratings, based on an analysis of 17 cement-makers who account for 85% of the 668 mt installed capacity as of March 2025.
In the past three fiscals, cement saw robust demand—with volume clocking a compound annual growth of 9.5%—driven by key segments such as infrastructure and housing. As a result, capacity utilisation rose to 70% last fiscal, compared to a decadal average of 65%.
According to Anand Kulkarni, a director with Crisil, over the fiscals 2026-28, cement makers are expected to see healthy incremental demand of 30-40 mt annually, prompting a strong growth in capacities. This fiscal is likely to see commissioning of 70-75 mt and the rest through the next two years, taking the capacity utilisation back to 70%.
Additionally, two-thirds of the incremental capacity will be in the form of split grinding units, which are separate cement grinding plants located away from the main clinker facilities. The grinding units typically have lower complexity compared with clinker plants, resulting in lower capex and shorter gestation periods of one-two years, compared to three-four years for integrated cement plants.
According to Parth Shah, an associate director with Crisil, cement makers are estimated to incur capex of Rs 1.2 trillion between fiscals 2026 and 2028 -- around 50% higher compared to the previous three fiscals.
Notably, this capex also includes 10-15% outlay towards investments in green energy and cost efficiency improvement projects, which would support profitability.