India in Focus

The Indian cement industry is a key pillar of the nation's infrastructure and economic growth. As the second-largest cement producer globally, it significantly contributes to India’s GDP, industrial output, and employment. With an installed capacity of around 690 million tpy, the sector plays a crucial role in housing, transportation, and urban infrastructure. Cement production for FY23 – 24 is estimated at 390 million tpy, reflecting steady demand supported by government initiatives and private investments.

The industry’s growth has been marked by substantial capacity additions, with over 15 million tpy added in 2022 – 23 by major players like UltraTech Cement, Shree Cement, and ACC-Ambuja. However, capacity utilisation is mixed, averaging 65 – 70%, with North and East India operating at near 80%, while the South faces overcapacity with utilisation as low as 50 – 55%.

Housing accounts for 60% of cement consumption, followed by infrastructure projects (25%) and commercial real estate (15%). Government programmes like Bharatmala, Sagarmala, and Pradhan Mantri Awas Yojana (PMAY) are major drivers, with demand expected to exceed 500 million tpy by 2030. Urbanisation – projected to reach 40% by 2030 – further fuels the demand for robust infrastructure, solidifying the industry's importance.

Indian cement plants are among the most energy-efficient globally, achieving thermal energy consumption levels of 725 kcal/kg of clinker and electrical energy usage of 75 kWh/t of cement. Advanced technologies like waste heat recovery (WHR) systems and digital automation have reduced production costs and environmental impact, meeting global sustainability benchmarks.

The industry is also prioritising green technologies and low-carbon solutions, focusing on reducing clinker factor and increasing alternative fuel (AF) use. These efforts reflect the sector's commitment to balancing economic growth with environmental responsibility, ensuring its continued importance in India’s infrastructure and economic aspirations.

The current landscape of the Indian cement industry

The Indian cement industry, with an installed capacity of approximately 590 million tpy as of FY23 – 24, is the second-largest globally, behind China. Production for FY23 – 24 is estimated at 390 million tpy, with sector-wide utilisation rates averaging 65 – 70%. However, regional variations exist, with northern and eastern regions operating near 80% due to strong infrastructure demand, while southern regions face overcapacity, with utilisation rates as low as 50 – 55%.

Consumption trends and drivers

Cement consumption in India is influenced by both rural and urban demand. Rural areas account for 40% of total consumption, driven by home building and government housing schemes like PMAY, while urban areas contribute the remaining 60%, spurred by infrastructure, commercial real estate, and industrial projects. Housing remains the dominant sector, absorbing around 60% of cement production, followed by infrastructure projects (25%), driven by initiatives like:

• Bharatmala Pariyojana: developing 34 800 km of highways by 2027.
• Sagarmala programme: modernising 577 ports.
• Smart cities mission: urban development in 100 cities.

Commercial real estate and industrial sectors make up the remaining 15%, backed by private sector investments.

Key players and market distribution

The industry is led by major players like UltraTech Cement, Ambuja Cements, ACC, Shree Cement, and Dalmia Bharat, which collectively account for over 60% of total production. The recent merger of Ambuja and ACC under the Adani Group has reshaped market dynamics, intensifying competition, particularly with UltraTech. Regional players like Ramco Cements, JK Cement, and the India Cements cater to specific regional markets.

Regional disparities in production and consumption

Northern and western regions benefit from balanced demand and supply dynamics, supported by infrastructure activity and urbanisation. Eastern India faces strong demand but struggles with logistical constraints. In contrast, Southern India is burdened with excess capacity, leading to price wars and lower profitability.

Technological advancements and manufacturing excellence

Indian cement plants are globally recognised for their energy efficiency. Thermal energy consumption averages 725 kcal/kg of clinker, and electrical energy usage is 75 kWh/t of cement, both among the best globally. Investments in WHR systems have surged, covering 20 – 25% of power requirements. The industry is also adopting digital technologies such as predictive analytics, IoT, and process automation to improve productivity and reduce operational costs.

Emerging trends in consumption patterns

Blended cements like Portland Pozzolana Cement (PPC) and Portland Slag Cement (PSC) are gaining popularity, driven by sustainability awareness, government regulations, and rising raw material costs. Demand for these greener alternatives is expected to grow by 7 – 8% annually, aligning with the global shift toward carbon-neutral construction practices.

Key challenges facing the industry

The Indian cement industry, despite its importance in infrastructure and economic growth, faces significant challenges, primarily due to rising input costs and operational issues that impact profitability, production efficiency, and quality.

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