Cement Demand in India Expected to Increase by 7.5% in 2025-26: Report
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Synopsis
The cement industry in India is anticipated to grow by 6.5-7.5% in the fiscal year, attributed to increased infrastructure spending and favorable weather conditions boosting rural housing demand, as reported by Crisil.
Key Takeaways
- 6.5-7.5% demand growth expected in the cement sector.
- 10% increase in budget for core infrastructure.
- Rural housing demand to rise with 32-34% share.
- Urban housing segment to recover due to interest rate cuts.
- Investment in infrastructure remains a key driver.
New Delhi, April 22 (NationPress) The cement sector is projected to experience a demand growth of 6.5-7.5 percent this fiscal year, spurred by a 10 percent increase in budget allocations for essential infrastructure ministries. This growth is also anticipated due to expectations of a more favorable monsoon, which is likely to enhance agricultural profitability and subsequently elevate rural housing demand, as outlined in a Crisil report released on Tuesday.
In the previous fiscal year, cement demand growth was relatively modest at 4.5-5.5 percent, attributed to a slow start linked to general elections, a well-distributed monsoon affecting construction, and a high base from the prior three fiscals, according to the report.
Additionally, the lack of robust state government spending in the first half of the year impeded project execution, while a sluggish real estate market adversely impacted urban housing.
“Infrastructure, which constitutes 29 to 31 percent of domestic cement demand, is set to remain a vital demand driver in the current fiscal year. Roads have been the primary contributor, followed by railways, irrigation, and urban infrastructure,” the report noted.
Rural housing is projected to maintain its dominance in cement consumption, with an estimated share of 32-34 percent, as a healthy monsoon season is expected to enhance agricultural income, leading to increased housing demand.
Moreover, various initiatives by the central government, including PMGSY and MNREGA, targeted at the rural segment, are expected to support consumption due to heightened budgetary allocations.
Execution pace is anticipated to accelerate under the Pradhan Mantri Awas Yojana–Gramin, with a rise in sanctions and an increase in under-construction units. Average rural wages, which are estimated to have surged by around 25 percent year-on-year in fiscal 2025, are expected to remain elevated in this fiscal as well.
The urban housing segment, which faced challenges in fiscal 2025 due to a sluggish real estate market, is projected to regain momentum in the current fiscal year, supported by a low base, interest rate reductions, and improved execution under the Pradhan Mantri Awas Yojana–Urban. The allocation for this scheme has seen a significant increase of 45 percent in the Union Budget for 2025-26.
The industrial and commercial sector, which makes up 13-15 percent of the domestic cement demand, is expected to witness steady growth this fiscal, fueled by activity in commercial real estate and warehousing.
After three years of robust growth, this segment experienced a slowdown in fiscal 2025 due to a moderation in private capital expenditure, the report indicated.
“Notably, the budgets of 12 states, representing 63-65 percent of Indian cement demand, reflect a substantial 11 percent increase in total allocations for the current fiscal year. Additionally, the government’s focus on developing specialized rail corridors for the energy, mineral, and cement sectors, along with initiatives to promote tourism, is expected to enhance demand,” stated Crisil Intelligence director Sehul Bhatt.
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