Cement Industry Sees 7.5% Growth This Year on Infra Drive and Rural Housing Demand

India’s cement industry is likely to record a demand growth of 6.5-7.5% in FY26, driven by strong government expenditure on infrastructure and enhanced rural housing demand, says Crisil Market Intelligence and Analytics. This is an upgrade from FY25, when growth was moderate at 4.5-5.5% because of a sluggish beginning due to the general elections, a geographically well-distributed monsoon in construction, and a high base of past years.

A top catalyst for this fiscal’s growth forecast is the 10% budget outlay rise to key infrastructure ministries. They are in the frontline of infrastructure development and together command a majority of cement demand. Infrastructure activity today accounts for 29-31% of the nation’s cement consumption and is likely to remain the principal growth driver in FY26.

Rural housing is poised to experience robust momentum with the help of an over-average monsoon that is expected to boost agriculture earnings and rural wealth. Crisil projects a 25% year-on-year increase in average rural wages for FY25, which is set to be high this year as well. The Pradhan Mantri Awas Yojana – Gramin (PMAY-G) is experiencing enhanced implementation with enhanced sanctions and under-construction units emerging across states.

Urban housing, which struggled in FY25 because of weak real estate activity, has a revival on the cards. The low base, anticipated cuts in interest rates, and a 45% jump in the budgeted allocation for the Pradhan Mantri Awas Yojana – Urban (PMAY-U) are likely to boost recovery.

On top of that, government budgets of 12 prominent cement-consuming states covering a cumulative total of nearly 65% of India’s cement demand together raised their collective combined allocations by 11% signaling high regard for infrastructure and housing growth.

In industry and commerce sectors covering 13-15% of domestic demand, consistent expansion is expected to happen. The industrial and commercial segment will get powered by increases in commercial office spaces and warehouse building.

Crisil’s Associate Director Sachidanand Choubey pointed out that increased capital spending in major industries and targeted government efforts such as the use of dedicated rail corridors for cement, mineral, and energy industries will again drive demand. With the supply still tight, firms are likely to follow a moderate 2-4% price hike in FY26 in order to enhance realisations, even if competition is high.