India’s Cement Sector Records Strong Growth as Demand, Prices and Cost Trends Support FY26 Outlook

India’s cement industry is witnessing a period of steady momentum, driven by strong construction demand, stable prices and favourable input cost trends. According to the latest assessment by ICRA, cement volumes grew by 7.6 per cent between April and October 2025, touching 266.7 million metric tonnes. This growth reflects continued activity across infrastructure, housing and commercial real estate, which remain the key drivers of cement consumption in the country.

October 2025 alone saw a 5.3 per cent increase in volumes compared to the previous year, highlighting the sector’s resilience even as the pace of new project execution varies regionally. For producers, the pricing environment has also remained relatively steady. Average cement prices in October stood at approximately Rs 340 per bag, marking a modest one per cent year-on-year increase. Over the seven-month period, prices averaged around Rs 350 per bag, about six per cent higher than the corresponding period last year.

One of the biggest contributors to the improved profitability outlook is the movement in key fuel costs. Coal prices declined by nearly 10 per cent year-on-year to USD 103 per tonne, offering much-needed relief to manufacturers who continue to rely heavily on thermal fuel. Petcoke prices, however, recorded an 18 per cent increase to Rs 11,950 per tonne in November, although the overall fuel basket still remains manageable. Diesel prices stayed stable at around Rs 88 per litre, providing further cost predictability for logistics and market distribution.

ICRA notes that these trends are likely to result in healthier operating margins for cement companies in FY26. Margins are expected to improve by 90 to 180 basis points, supported by anticipated price hikes and range-bound input costs.

The long-term outlook for the sector remains strongly positive. Crisil Ratings projects that India may add 160–170 million tonnes of grinding capacity between FY26 and FY28, nearly 75 per cent higher than the additions made in the previous three fiscals. With demand growing at a compound annual rate of 9.5 per cent over the past three years and capacity utilisation touching 70 per cent, India’s cement industry is firmly positioned for sustained expansion.