India’s Cement Industry Set for Major Capacity Expansion, ICRA Reports
India’s cement industry is poised for a substantial growth in capacity, with an expected addition of 70-75 million metric tonnes (MT) over the next two years, according to the credit rating agency ICRA. The expansion will be driven by both clinker and grinding capacities, reflecting the industry’s ongoing efforts to cater to growing domestic demand.
Clinker and Grinding Capacities to Propel Growth
Out of the anticipated capacity increase, 33-37 million MT will come from clinker capacity expansions, while the remaining will stem from grinding capacity. The industry is set to add approximately 33-35 million MT of new capacity in the fiscal year 2025 (FY2025), slightly exceeding the 32 million MT added in FY2024. Furthermore, a higher addition of 37-39 million MT is forecast for FY2026, indicating a sustained growth trajectory.
Regional Contributions to Expansion
The eastern and southern regions are expected to lead this growth, collectively contributing around 38-40 million MT during FY2025 and FY2026. The capacity additions in these regions are projected to be evenly distributed, highlighting their strategic importance in meeting the country’s rising cement demand.
Moderate Utilization Rates Despite Growth
Despite the robust expansion plans, ICRA has projected only a slight improvement in the industry’s capacity utilization rates. The utilization rate is expected to rise marginally to 71% in FY2025 from 70% in FY2024, driven by an increase in cement production. This indicates that while capacity is growing, the pace of demand may not fully align with supply.
Revised Volume Growth Forecast for FY2025
ICRA has also revised its growth forecast for cement volumes in FY2025, citing a slowdown in construction activities. This adjustment reflects the challenges faced by the construction sector, which has a direct impact on cement consumption.
Industry Outlook
The planned capacity additions signal the cement industry’s long-term confidence in India’s infrastructure and real estate growth. However, the moderate utilization rates and revised volume projections underscore the need for balanced demand generation to optimize the benefits of these expansions.
As the eastern and southern regions prepare to spearhead this growth, stakeholders will be watching closely to assess how the sector navigates the evolving market dynamics and ensures sustainable growth in the coming years.
