Cement Demand Expected to Surge 6.5-7.5% in FY26: Crisil Insights

Crisil Research has released a forecast indicating that cement demand in India is expected to grow by 6.5-7.5% in the fiscal year 2026 (FY26). This projection comes amid a gradual recovery in the infrastructure and real estate sectors, which are key drivers of cement consumption. The resurgence is anticipated to be fueled by significant investments in infrastructure projects and a pickup in the pace of real estate development.

However, the first half of the current fiscal year 2025 (FY25) has been marked by weak state government spending, which has slowed the execution of various projects. This reduced expenditure has had a direct impact on the demand for cement, as state governments play a crucial role in initiating and completing infrastructure projects. Additionally, the real estate market, which has been sluggish, has further contributed to the deceleration in cement consumption.

Despite these challenges, industry experts remain optimistic about the future. The Indian government's push for development and the anticipated increase in private investment are expected to drive demand in the coming years. The government's flagship programs, such as the Pradhan Mantri Awas Yojana (PMAY) and the National Infrastructure Pipeline (NIP), are key initiatives that are expected to boost the construction sector and, consequently, cement demand.

The real estate sector, which has been grappling with issues such as high inventory levels and liquidity constraints, is also showing signs of improvement. The introduction of the Real Estate (Regulation and Development) Act (RERA) and the Insolvency and Bankruptcy Code (IBC) has brought more transparency and accountability to the sector, which is expected to attract more investors and homeowners.

Moreover, the increasing focus on urbanization and the development of smart cities is expected to further propel the demand for cement. As more people move to urban areas, the need for affordable housing, commercial spaces, and public infrastructure will rise, creating a significant demand for construction materials, including cement.

Crisil's forecast is based on a comprehensive analysis of various economic indicators and industry trends. The research firm has taken into account factors such as government policies, investment flows, and consumer behavior to arrive at its projections. Despite the current slowdown, the long-term outlook for the cement industry remains positive, with a strong pipeline of projects and continued government support.

In conclusion, while the near-term challenges are significant, the cement industry is poised for a strong recovery in FY26. The combination of government initiatives, private investment, and urbanization trends is expected to drive demand and ensure sustained growth in the sector.