Cement

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India is the 2nd largest cement producer in the world. In 2019, it accounted for over 8% of the global installed capacity.
In FY19, the overall cement production capacity of India was nearly 502 million tonnes (MT) and consumption increased 5%
The private sector dominates the cement industry with 98% out of the total capacity and the rest with public sector
Cement production reached 334.48 MT in FY20

Competitive Advantage for India

Long-term cement demand growth rate is estimated at 1.2 times of GDP growth rate
Northeast, which is witnessing a construction boom, offers attractive investment opportunities
Oligopoly market, where large players have partial pricing control
Low threat from substitutes

Government Policies:

National Infrastructure Pipeline (NIP) introduced projects worth Rs 102 lakh crore (US$ 14.59 billion) for the next five years
In Union Budget 2019-20, the Government of India extended benefits under Section 80 - IBA of the Income Tax Act till March 31, 2020 to promote affordable housing in India

Investments

FDI inflow in the industry related to manufacturing of cement and gypsum products reached US$ 5.28 billion between April 2000 and March 2020

Market overview

Capacity addition of 20 million tonnes per annum (MTPA) is expected during FY19- FY21
India's cement production is expected to rise between 5-7% in FY20, backed by demands in roads, urban infrastructure, and commercial real estate
The top 20 companies account for around 70% of the total production
India’s export of cement, clinker, and asbestos increased at a CAGR of 6.44% between FY16-FY19. In FY20 (till February 2020), it reached US$ 1.83 billion

Strategies updated

Presence of small & mid-size cement players across regions is increasing, which helps diminish market concentration of industry leaders
Companies are trying to develop a niche market for Ready Mix Concrete (RMC)

Growth drivers

India's cement demand was expected to rise 8% in FY20 according to rating agency ICRA
Public infrastructure projects underway like metro rail projects, dedicated freight corridor, smart cities etc.
Growth of the industrial sector due to strong economic growth is expected to increase in demand in the long run
Enhanced interest deduction up to Rs 150,000 (US$ 2,146) for purchase of an affordable house.

New Opportunities

Per capita cement consumption of cement at 235 kgs is currently the lowest among developing countries as the world averages 520 kgs
Opportunities available in areas such as housing, dedicated freight corridors, ports and other infrastructure projects
Northeast, which is witnessing a construction boom, offers attractive investment opportunities
Strong government’s focus on infrastructure and housing for all by 2022 will lead to high cement demand

Key Industry Organizations