With a total capacity of 151.2 million tonnes (MT), India is the second largest producer of cement in the world after China. The Indian cement industry is dominated by 20 companies, which account for about 70% of the total cement production in India.
An Overview of the Cement Sector
Cement industry in India dates back to 1889 when a Kolkata-based company started the cement production from Argillaceous. But in the early 1900’s the industry began to unite. In 1914, India Cement Company Ltd. was established at Porbandar with a capacity of 10,000 tons and a production of 1000 tons. The First World War gave the first impetus to the cement industry in India and the industry began to grow rapidly in terms of production units and installed capacity. This milestone was achieved around 1921 when the total installed capacity reached nearly 1 million tonnes per annum (MTPA).
By 1939, there were about 26 fixed plants and 7 mini plants with a total installed capacity of 5.99 MTPA. The Second World War resulted in a setback for this industry as it suffered due to a shortage of raw materials, fuel, power, and transportation system. Post-independence brought rapid growth to the Indian economy due to the high demand for cement.
The cement industry’s future is linked to the Indian economy, which remains one of the fastest-growing economies in the world. India is the second-largest country in the world in terms of cement production.
India has a lot of potential for development in the infrastructure and construction sector and the cement sector is directly expected to benefit from it. Some of the recent major government initiatives such as the development of 98 smart cities are expected to provide a major boost to the sector. The industry’s capacity is also expected to grow further in FY18, largely supported by new capacity additions and higher utilization levels.
The cement sector has attracted Foreign Direct Investment (FDI) equity inflows worth US$ 5,854.34 million during April 2000–December 2017, according to data released by the Department of Industrial Policy and Promotion (DIPP).
Cement consumption remained strong at 8 percent year-on-year (YoY) during 1H FY18. In line with this trend, most cement companies reported healthy growth in sales volumes during 1H FY18, which was supported by an uptick in demand from roads and housing sectors. According to the Central Pollution Control Board (CPCB), the installed capacity of cement stood at 455 million tonnes (MT) as of March 31, 2017.
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Indian cement market size
Cement is a key material used in the construction industry. India ranks second in global cement production. In 2016, cement production in India was recorded to be around 196.6 million tonnes (MT). The market size of cement stood at INR 3,200 billion. There were 210 large cement plants and 365 mini cement plants across India as of March 2017.
In 2016, the installed capacity of cement in India was around 484 million MT. The demand for cement is expected to rise at a CAGR of 6.2 percent to reach 572 million MT by 2019-20 from 367 million MT in 2011-12.
The Indian cement industry is dominated by 20 companies that account for nearly 70 percent of the total cement production in India. The top 20 producers account for more than 70 percent of the installed capacity and about 67 percent share of the total domestic market. The next 10 companies account for nearly 15 percent share and about 18 percent share of the total domestic market respectively.
Indian cement market size will increase to 575 million tons by 2025 and the total cement production capacity is expected to reach 550 million tons. The cement production capacity is estimated to reach 550 MT by 2025.
In the Union Budget of India 2018-19, Finance Minister Arun Jaitley announced plans to build affordable houses for all by 2022, which will boost demand for cement in the years ahead.
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