Background paper – Cement

1. Cement

2. © Confederation of Indian Industry
Contents
 Sectoral Overview
 The Potential
 Existing Enablers
 Major Challenges Faced
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Sectoral Snapshot
2nd
Largest producer
in the world
6.7%
CAGR of Production
over FY07-15
Direct Employment to
~150,000 & Indirect
Employment to
~500,000 people
> USD 3 bn
FDI inflow to sector
April 2000 – Dec 2015
Source – IBEF, International Journal of Emerging Research in Management &Technology
1.5%
Contribution to
India’s GDP
~7%
Share in global
production

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Advantage India
Infrastructure Growth
Robust and high infrastructure
growth in 12th Five Year Plan
Potential
Indian cement market is expected to reach a production capacity of 550
MTPA by 2025 from existing capacity of 390 MTPA
Source – CII-AT Kearney Cement Vision 2025; Planning Commission, IBEF
Key Drivers of Demand
Housing – 67%
Infrastructure – 13%
Commercial construction – 11%
Industrial construction – 9%
Policy Initiatives
Flagship programs like Smart Cities,
Housing for All, AMRUT to give
impetus to demand; Adoption of
cement for construction of all new
road projects

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Existing Enablers
Policy and Eco-system
Budget 2016-17 has proposed
 100 per cent deduction for profits to an
undertaking in housing project for select
accommodation.
 Allocation of Rs 7,296 crore towards Urban
Rejuvenation Mission (AMRUT and Smart
Cities).
 Rise in allocation under Pradhan Mantri Gram
Sadak Yojana (PMGSY) to Rs 19,000 crore (US$
2.79 billion) for FY17.
Industry Evolution and Capabilities
 Has always grown at a higher pace than the
economy of India
 Return on Investment is high and stable
 Low per-capita consumption showcases the
potential for this sector.
 Huge Export potential considering the Middle
East market.
 Being a mature industry, availability of skilled
human resources is good.
Market
 Demand for cement is expected to accelerate in the coming years. In order to meet the rising demand,
cement companies are expected to scale up production by 56 MT in the next 3 years
 Boost to low-cost housing and infrastructure; Smart Cities; India’s road programme and Housing for All,
are likely to revive the demand for cement in India
 Boost to FDI - Large number of foreign players have entered and have invested heavily in the Indian
market
Source – Invest India

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Major Challenges Faced
 High Excise Duty
• Cement is one of the highest taxed commodities next only to luxury goods
and at present 4th highest revenue generator for the Government of India
 Logistics & Railway Constraints
• Reduction in the fuel price, and no reduction in rail freight, which is leading
to diversion from rail to road
• Lack of Cover Sheds and Platforms
• Delayed loading time for BCNHL in new sidings
 Unavailability of Fly Ash
• Erratic supplies despite investing heavily on O&M systems at power plants
• Substantial increase in landed cost of fly-ash; Imposition of Excise Duty on Fly
Ash
• High transportation cost of fly-ash
 Compliance of New Emission Standards
• The new emission norms introduced require huge CAPEX investments
• Timeline for compliance and implementation