India cement capacity additions to keep utilisation at 70-71% in FY27: Equirus
Synopsis
Record cement capacity additions — 50-55 MTPA in FY26 alone — are flooding the market faster than demand can keep pace, locking utilisation at a modest 70-71% even as India's infrastructure boom drives solid consumption growth. The real battle ahead is not who builds the most capacity, but who sweats it most efficiently.
Key Takeaways
India's cement capacity utilisation is projected at 70-71 per cent in FY27 , according to an Equirus Securities report.
Industry capacity additions are expected at 42-44 MTPA in FY27, following 50-55 MTPA in FY26.
Cement demand grew an estimated 6.5-7.5 per cent in FY26; growth is forecast to moderate to 5 per cent in FY27.
Northern and central regions are expected to see higher utilisation; the south faces a capacity overhang.
Long-term growth is supported by the National Infrastructure Pipeline , Smart Cities , affordable housing, and India's below-global-average per-capita cement consumption.
India's cement industry is set to maintain capacity utilisation at around 70-71 per cent in FY27, even as the sector logs record capacity additions, according to a report by Equirus Securities released on Friday, 19 June. The projection reflects a demand-supply dynamic where new capacity is being commissioned faster than consumption can absorb it.
Capacity Additions and Demand Outlook
The cement sector is estimated to have grown at 6.5-7.5 per cent in FY26, with demand growth expected to moderate to around 5 per cent in FY27. Industry capacity additions are projected at 42-44 million tonnes per annum (MTPA) in FY27, following an even larger 50-55 MTPA added in FY26. This sustained pace of capacity creation is expected to keep utilisation levels broadly stable across the sector, according to the Equirus Securities report.
Regional Variations in Utilisation
The report highlights a clear north-south divergence in capacity utilisation. Northern and central regions are expected to record higher utilisation rates, while the southern region faces relatively moderate levels due to a persistent capacity overhang. This regional imbalance could weigh on pricing power for producers operating primarily in southern markets.
Demand Drivers Remain Intact
Despite the supply pressure, demand fundamentals remain supportive. The report noted that construction activity stayed resilient through FY26, particularly in the post-monsoon second half, buoyed by sustained momentum in housing and infrastructure segments. The sector continues to benefit from rapid urbanisation, rising housing demand, and government-led investments across roads, metro rail projects, industrial corridors, ports, and other large-scale infrastructure initiatives. Notably, India's per-capita cement consumption remains significantly below the global average, providing structural headroom for long-term growth.
Efficiency Over Expansion: The Next Phase
With fresh capacities coming on stream across the sector, the Equirus Securities report suggests the industry may be entering a phase where operational efficiency, utilisation improvement, and return ratios become the primary differentiators. Leading cement producers are pursuing both organic and inorganic expansion routes, but the focus is expected to increasingly shift toward sweating existing assets and extracting efficiencies from recently commissioned facilities.
Long-Term Growth Prospects
The long-term outlook for Indian cement remains favourable, underpinned by rising infrastructure spending, affordable housing initiatives, manufacturing investments, Smart Cities projects, and the National Infrastructure Pipeline. As utilisation stabilises and capacity additions eventually taper, operational productivity is expected to emerge as the critical metric separating sector leaders from laggards.
Point of View
But the demand curve — solid as it is at 5-7% growth — simply cannot keep pace with 42-55 MTPA of annual additions. The regional skew matters too: the south's capacity overhang is a structural drag that national averages obscure. The next phase will reward disciplined operators who can drive unit economics rather than headline tonnage. India's per-capita consumption gap is real, but it is a decade-long opportunity, not a quarterly one.
NationPress
4 Aug 2026
Frequently Asked Questions
What is the cement capacity utilisation forecast for FY27 in India?
India's cement industry capacity utilisation is expected to remain stable at around 70-71 per cent in FY27, according to an Equirus Securities report. The steady level reflects record capacity additions that are broadly keeping pace with demand growth.
How much new cement capacity is being added in FY27?
The industry is projected to add 42-44 MTPA of new capacity in FY27, following an even larger 50-55 MTPA added in FY26. This sustained pace of additions is the primary reason utilisation levels are not rising despite healthy demand.
Why is cement utilisation lower in southern India?
The southern region faces a capacity overhang — where installed capacity has grown faster than local demand — leading to relatively moderate utilisation compared to northern and central regions, where demand-supply dynamics are tighter.
What is driving long-term cement demand in India?
Long-term demand is underpinned by rapid urbanisation, affordable housing initiatives, government investment in roads, metro rail, ports, industrial corridors, Smart Cities projects, and the National Infrastructure Pipeline. India's per-capita cement consumption also remains well below the global average, indicating significant headroom.
What will differentiate cement companies as new capacity floods the market?
According to the Equirus Securities report, operational efficiency, utilisation improvement, and return ratios are expected to become the key differentiators. Companies that can extract maximum productivity from recently commissioned facilities will likely outperform those focused solely on capacity expansion.
