1. CEMENT INDUSTRY - INDIA
The document outlines the outlook
and forecasts for the cement
industry in India. It analyses the
drivers and challenges for the
industry in the five year period from
2015 - 2020.
LIZA
D’SOUZA

2. Overview
Concrete is one of the basic elements needed for se2ng up strong and healthy infrastructure. Cement,
therefore plays an important role in the economic as well as socio-economic development of a country.
According to the Ministry of External Affairs, Government of India, India was the second-largest producer
as well as consumer of cement in the world in 2015 (Karkun, 2015). The United States Geological Survey
stated that in 2014, India produced 280 MT of cement and had a clinker producPon capacity of 280 MT
per annum. Increasing investments by the government, relaxaPon of FDI norms in the construcPon
sector, and the growing construcPon sector in emerging economies are expected to drive the growth of
cement industry in the country (Saunders, 2015).
Drivers
Growth in the construc.on industry and Emerging Economies
The key parameter that defines the growth of the cement industry is increasing disposable income,
which leads to availability of fund for new construcPons and infrastructure development acPviPes. The
largest importer of cement from India is Sri Lanka, followed by Saudi Arabia, the U.S., Maldives, the
U.A.E, Nigeria, Qatar, and Bangladesh. Some of the drivers for the increasing demand for cement from
these countries are the growing GDP of these developing economies as well as its growing focus on
housing and infrastructure development. In 2011, countries such as the U.A.E and Saudi Arabia received
construcPon projects worth USD 319.1 billion and USD 218.9 billion, respecPvely (McCaffrey, 2016).
These countries are undertaking projects in the infrastructure and residenPal/non-residenPal segments.
According to a report published by Accenture, Ptled “Seven Trends Transforming the ConstrucPon
Marketplace”, the construcPon market in developing economies is projected to double over the next
decade to reach USD 6.7 trillion.
Increasing domes.c demand and Government Investments
Over the past few months India has experienced a pickup in macro-economic trends, which displays a
posiPve outlook towards the future. The Finance Minister of India, Mr. Arun Jaitley has built upon a
pragmaPc approach which consPtutes a long-term plan that would combine investments, policy reforms,
and improved regulaPons to provide a right environment for growth over the coming years and decades.
This “Growth Oriented” approach has envisioned a GDP growth of 8% in 2016, while a double digit
growth is expected by 2020. The Government of India (GoI) has increased its investments in housing and
infrastructure development. In August 2015, the GoI allocated USD 7.5 billion to develop 100 smart ciPes

3. across the country (D, 2015). The current budget has proposed the creaPon of “NaPonal Investment in
Infrastructure funds” which will invest in the public-sector infrastructure financing companies; this
funding will allow them to leverage their higher credit raPngs for investments from the domesPc and
internaPonal debt markets. Fresh allocaPon of USD 2.25 billion has been made to build up roads and
USD 1.6 billion for railways. In order to support infrastructure growth, the government has also
announced in the budget a roadmap of investments accounPng to USD 138 billion for the next five years.
ResidenPal construcPons accounted for 67% of the construcPon acPviPes taken up in India in 2015 and is
esPmated to grow at a high CAGR due to urbanizaPon, industrializaPon, development of megaciPes,
township projects, IT parks, growing real-estate market, and easy availability of finance. According to
the 12th Five Year Plan, i.e. 2012-2017, the government plans to invest USD 1 trillion in infrastructure
development (IBEF, 2016).
Increasing FDI Investments
FDI is a criPcal driver of the economic growth of the country. The GoI has relaxed FDI norm in the
construcPon sector which would boost foreign investments the residenPal, commercial, and industrial
sectors of India. The major constraints to gain FDI access in the construcPon sector, such as minimum
built up area, exit barriers, and minimum capital requirement, have been relaxed; therefore the size of
the project wouldn’t be a concern any longer. According to the Department of Industrial Policy and
PromoPon (DIPP), the FDI investments received for construcPon development from April 2013 to
September 2015 was USD 24.16 billion. The government’s efforts with respect to relaxing FDI norms in
the construcPon sector and improving the ease of doing business in India has led to an increase in FDI
through the Foreign Investment PromoPon Board (FIPB) route by 26 percent to USD 31.9 billion in the
year 2015 against USD 25.3 billion in 2014. FDI accumulaPon, through April 2000-September 2015, in
cement and gypsum products accounted for USD 3.1 billion (CMA, 2015a).
Opportunities
Precast concrete market in India
While major residenPal construcPons in India peruse built in-situ model, India’s commercial and
industrial construcPon sector has been experiencing a rise in the use of precast construcPon
technologies. The market for precast construcPon in India is expected to grow at a CAGR of 7% during
2015-2020. The precast market of India gives cement companies an opportunity to move forward in its
value chain. Also the rise in residenPal and non-residenPal construcPon and infrastructure development

4. acPviPes act as drivers to the precast concrete market which will in turn increase the demand for cement
in the county.
North East India
North East India comprises of states such as Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, and Tripura. The North East Industrial and Investment Policy, 2007, devised by the
Indian government, is expected to catalyze infrastructure and industrial development in these states. The
cement manufactured locally in this region is not sufficient for the demand they face (Bloomberg, 2015).
The demand-supply gap experienced in these states impels them to purchase cement from other parts
of India. High transportaPon cost causes cement prices to rise considerably in this region. Companies
such as Dungsam Cement (Bhutan) are entering the India market with its main focus on North East India
(CMA, 2015b)
Future Forecast
e-es$mated; p-projected
Year 2013 2014 2015-e 2016-p 2017-p 2018-p
2019-
p
2020
-p
CAGR
(2015-20
20)
Production
(MT)
223.45 250.00 279.83 313.89 352.77 396.82 448.34 506.62 12.61%
Value
(USD
Billion)
20.45 23.00 25.93 29.35 33.36 37.98 43.62 50.66 14.34%

5. Bibliography
• Bloomberg. (2015). Aditya Birla Corporate PresentaPon.
• CMA. (2015a). Cement Exports (online). from Cement Manufacturer's AssociaPon hpp://
www.cmaindia.org/industry/contribut/exports.html
• CMA. (2015b). Rajasthan plans to divest stake in 8 thermal power units (online). Retrieved 24 Feb
2016, from Cement MAnyfacturer's AssociaPon hpp://www.cmaindia.org/updates/news-archives.html
• D, S. (2015). Cement sector eyes growth in FY16 (online). Retrieved 24 Feb 2016, from Business Insider
hpp://www.business-standard.com/arPcle/companies/cement-sector-eyes-growth-in-
fy17-115051201144_1.html
• IBEF. (2016). Cement. (January).
• Karkun. (2015). Current Challenges and OpportuniPes in the Indian Cement Sector. Project Reporter,
17(March).
• McCaffrey, R. (2016). Global Cement MAgazine (online). Retrieved 23 Feb 2016, from Global Cement
hpp://www.globalcement.com/pdf/eGCFeb2016ns.pdf
• Saunders, A. (2015). The highs and lows of India’s cement industry (online). Retrieved 24 Feb 2015,
from Global Cements hpp://www.globalcement.com/magazine/arPcles/919-the-highs-and-lows-of-
india-s-cement-industry