GST Cut May Shift Cement Market Towards Premium Players, Says Nomura

India’s cement market is bracing for a major shift as the GST Council meets on September 3–4 to decide on reducing the tax rate on cement from 28% to 18%. A cut, analysts say, could accelerate demand for premium cement brands while putting pressure on lower-cost players.

According to a Nomura report, the industry is steadily moving toward higher-quality products, with Category A cement gaining share against lower-priced Category C. Currently, cement is sold across four segments—Premium, Category A, B, and C. Premium bags cost about ₹50 more than Category A, while A, B, and C differ by ₹25–30 per bag.

Nomura estimates that Category A, which accounts for nearly 40% of volumes today, could rise to 55–60% by FY30 if GST is cut. Pan-India players such as Ultratech and Ambuja are expected to benefit the most, as demand grows for products like Ultratech Weather Plus and ACC Gold.

Dealers hike prices ahead of GST call
Even before the GST decision, dealers have begun adjusting prices. In West Bengal, prices have risen by ₹11 per bag, with more increases of ₹20–30 expected across India in late August. Nomura cautioned these hikes could attract scrutiny from tax authorities but noted they may temporarily support firms like Dalmia Bharat and Nuvoco.

Shree Cement closes in on Category A
The report highlighted Shree Cement’s shift in strategy—narrowing the price gap with Category A through branding and marketing. Dealer checks show that in North India, Shree has cut the gap to ₹15 per bag from ₹25–30 earlier, while in the East it now trails by ₹20, down from ₹35. These two regions contribute over 80% of Shree’s sales.

Category C players lose ground
Meanwhile, Category C manufacturers are losing market share in states like Kerala, Rajasthan and West Bengal, as customers increasingly prefer higher-grade products. Even at higher prices, demand is shifting to Category A and B, a trend that favours larger players such as Ramco, Ultratech and Ambuja.

Nomura’s assessment suggests the GST cut could make premium cement more affordable, reshaping the industry’s pricing dynamics over the next five years.