India’s Cement Industry Poised for Steady Growth on Infrastructure and Housing Push

India’s cement industry is entering a phase of measured and sustainable growth, supported by strong demand from housing, infrastructure creation, and steady government spending. According to ICRA, cement volumes are expected to grow by 6–7 per cent in FY27, following an anticipated 6.5–7.5 per cent expansion in FY26, even as the industry operates on a high base.

Demand trends in the current fiscal underline this resilience. Cement volumes have already expanded by about 8.5 per cent during the first eight months of FY26, driven by sustained construction activity across residential, commercial, and public infrastructure projects.

With post-monsoon construction gaining pace in the second half of the year, demand is expected to improve sequentially. Potential policy support, including a possible reduction in GST on cement, along with continued capital expenditure by the government, could further strengthen consumption through FY26 and FY27.

On the supply side, large cement producers continue to expand capacity through both organic projects and acquisitions. The industry is expected to add around 42–44 million tonnes per annum of capacity in FY27, following additions of roughly 43–45 MTPA in FY26. Despite these expansions, overall capacity utilisation is projected to remain stable at about 70–71 per cent in FY27. Regional trends, however, remain uneven. Capacity utilisation in North and Central India is likely to stay above the national average, while the southern region may continue to face pressure due to surplus capacity.

Pricing is expected to provide moderate support to profitability. ICRA estimates average cement prices could rise by 2–4 per cent in FY27, after an estimated 3–5 per cent increase in FY26. This follows a price correction in FY25, when weaker activity in the first half weighed on realisations. Blended prices have already improved year-on-year in most regions during FY26, reflecting better demand-supply balance.

Input costs are likely to rise marginally in FY27, with pet coke, power, and freight remaining sensitive to global crude oil prices and geopolitical developments. Even so, profitability is expected to remain healthy. Operating profit per tonne is projected to improve in FY26 and moderate slightly in FY27, balancing higher costs with stable volumes and pricing.

Overall, the outlook for India’s cement sector remains positive. While capacity additions and cost pressures warrant close monitoring, sustained infrastructure spending, housing demand, and gradual pricing improvement position the industry for steady growth over the medium term.