India is a service driven county. It thrives on its robust service sector. In terms of industry and infrastructure, it doesn’t feature very prominently on the world map. However, the one industry where it out performs most developed countries is Cement.
There is a huge market for cement in India. That’s the reason we are the second largest producers of cement in the world!
There are many factors at play in the Indian economy that are working towards making this industry even more robust. Some of these are as follows:
1) Need for Infrastructure :
India lacks infrastructure to a great deal. Housing complexes, bridges, flyovers, etc, are experiencing a huge demand. The recent push for rapid urbanization (by creating 100 smart cities) by the Indian government has further added to the demand for cement.
2) Long Term Benefits :
The industry has just started to grow and it’s likely to remain in business for the next 2-3 decades. This is a huge incentive for interested investors. Long-term clarity of the market helps in drawing capital fast, thus making growth faster.
3) Conducive Government Policy :
In a county as heavily bogged down by red-tape bureaucracy as India, the cement industry is surprisingly well sorted. The current regime is pro-infrastructure and that situation isn’t likely to change anytime soon. A stable domestic political atmosphere is essential to drawing foreign investment. And that’s exactly what is happening in India.
On the whole, it’s all good news for the cement industry in India. The only let down is that this wave of production hasn’t yet reached the northeastern states in India. Consequently, these areas continue to suffer a severe shortage of infrastructure, crippling their robust tourism economy.
We hope that over the next few years, these areas also come into the fold of what can only be called a “cement revolution”. Here’s an overview in numbers*
- The total demand for cement is expected to touch 600 million tonnes by 2025.
- The housing sector accounts for more than two-thirds (67%) of the total consumption in India. This is followed by Infrastructure (13%), Commercial Construction (11%), and Industrial Construction (9%).
- Year-over-year growth for cement manufacturing is expected to be 8% for 2016-17, reaching nearly 400 million tonnes by the end of this year (2016).
- Even with a population of a billion plus, India’s per capita consumption of cement stands at a staggering 190 kgs.
- Even though the government encourages small and medium cement plants, and barrier to entry for newer players is quite low, yet, more than 70% of the market is controlled by the top 20 companies..
- An astonishing 97% of total production comes from 188 large cement plants. More than 350 small and medium plants account for the remaining 3%.
The government continues to push for rapid industrialization and the market is well set for a sustained growth. All the factors in the market today point to a healthy long run growth of the industry. And while there are no numbers directly telling us so, a rise in demand for cement, steel, and energy is often seen as the building blocks to creating a developed, industrial nation.
*Statistics from Ministry of External Affairs, Govt. of India.