The cement industry in India is poised for significant growth, projected to rise by 7-8% in FY26, fueled by robust real estate activity and major government housing initiatives such as the Pradhan Mantri Awas Yojana (PMAY). This promising forecast was detailed in a recent report by Axis Securities, highlighting the key drivers behind the anticipated boom in cement demand.
Government Initiatives Fueling Demand
The Indian government’s focus on infrastructure development, particularly through large-scale housing projects, has been a critical factor in boosting cement demand. The Pradhan Mantri Awas Yojana (PMAY) plays a pivotal role in this growth, as it aims to provide affordable housing to millions. The report emphasizes, “The projected growth in the real estate market, coupled with the government’s major housing initiatives such as the Pradhan Mantri Awas Yojana (PMAY), is expected to sustain the momentum in cement demand.”
Projected Growth in Cement Demand
According to the Axis Securities report, the cement demand is expected to increase by 7-8% in FY26. This growth is underpinned by the government’s continued emphasis on infrastructure and the sustained activity in the real estate sector. The report also notes that the allocation to infrastructure and construction in the 2025-26 budget is likely to further bolster cement demand.
| Year | Projected Cement Growth |
|---|---|
| FY25 | 4-5% |
| FY26 | 7-8% |
Performance in FY25
The cement sector experienced a subdued performance in the first half of FY25, with a modest year-on-year growth of 2-3%. However, a remarkable recovery was observed in the later quarters, with cement demand expanding at a high single-digit pace in Q3 and Q4. “Looking ahead, the demand environment remains strong, and the positive trend is expected to continue in Q1FY26,” the report adds.
Factors Contributing to Growth
- Increased government capital expenditure
- Revival in construction activity
- Favorable weather during peak periods
- Accelerated infrastructure spending
- Seasonal uptick in real estate activity
Industry Outlook
Core sector data released by the central government corroborates the strong performance, indicating an 8% year-on-year growth in cement output during April-May 2025. The industry benefited from robust infrastructure and construction activities, aligning with historical patterns where Q4 and Q1 are peak periods for cement consumption.
“While pricing may remain competitive due to heightened competition and incremental supply, cement manufacturers are likely to benefit from sustained volume growth,” the report concludes.
FAQ
Q: What is driving the increase in cement demand?
A: The increase is primarily driven by strong real estate activity and government housing initiatives like PMAY.
Q: What is the projected growth for cement demand in FY26?
A: Cement demand is projected to grow by 7-8% in FY26.
Q: How did the cement sector perform in FY25?
A: The sector saw a 4-5% growth overall, with a notable recovery in Q3 and Q4.
Q: What factors are contributing to the sustained demand for cement?
A: Factors include increased government capital expenditure, revival in construction activity, and favorable weather conditions.
Q: How is the competitive pricing environment expected to affect the cement industry?
A: Despite competitive pricing, manufacturers are expected to benefit from sustained volume growth.
In conclusion, the cement industry in India is on the cusp of a significant upswing, thanks to dynamic real estate activities and strategic government initiatives. The anticipated growth in demand highlights the sector’s resilience and the vital role it plays in the nation’s infrastructure development.