Crisil Intelligence notes that 12 key states—contributing 65% to India’s cement demand—have increased budgetary allocations by 11%.
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The cement sector is expected to see a 6.5-7.5 per cent demand growth this fiscal driven by a 10 per cent rise in budgetary allocation for core infrastructure ministries and expectations that an above-normal monsoon will boost agricultural profitability, lifting rural housing demand.
In FY25, cement demand growth was moderate at 4.5-5.5 per cent owing to a sluggish start to the year because of the general elections, spatially well-distributed monsoon that impacted construction, and high base of past three fiscals.
Infrastructure, which accounts for 29-31 per cent of the domestic cement demand, is expected to remain a key demand driver in the current fiscal too.
Sehul Bhatt, Director of Crisil Intelligence, said the Budget of 12 states, accounting for about 65 per cent of Indian cement demand, reveals a substantial 11 per cent increase in total allocations for the current fiscal.
Furthermore, the government’s emphasis on establishing specialised rail corridors for the energy, mineral and cement industries, along with initiatives to promote tourism, is expected to bolster demand, said Bhatt.
The pace of execution is expected to pick up under the Pradhan Mantri Awas Yojana – Gramin, with a rise in sanctions
and more under-construction units. Average rural wages, which are estimated to have increased 25 per cent on-year in fiscal
2025, are expected to remain on the higher side this fiscal year, too.
The urban housing segment, which faced headwinds last fiscal due to sluggish real estate, is expected to regain momentum in the current fiscal, owing to a low base, interest rate cuts and improved execution pace under Pradhan Mantri Awas Yojana – Urban.
The allocation for the scheme is up by a substantial 45 per cent in the Union Budget 2025-26.
The industrial and commercial segment, which accounts for 13-15 per cent of the domestic cement demand, is expected to see steady growth this fiscal, driven by traction from commercial real estate and warehousing.
Sachidanand Choubey, Associate Director, Crisil Intelligence said a demand surge is anticipated across segments, driven by increased capex allocations for infrastructure and housing ministries. Following a two-year lull, this uptick is expected to support a price rise in fiscal 2026.
Though competition for market share remains fierce, the Rating agency expects a modest 2-4 per cent price increase as companies focus on improving realisations, he said.
Published on April 22, 2025
