Cement Demand Expected to Surge 6.5-7.5% in FY26: Crisil Insights
Crisil Research projects a robust growth in cement demand in the coming fiscal year, driven by a resurgence in infrastructure and real estate sectors. Weak state government spending in the first half of FY25 and a slow real estate market have recently slowed the pace of project execution, but the outlook remains positive.
Cement DemandReal EstateInfrastructure ProjectsGovernment SpendingEconomic GrowthReal Estate NewsApr 22, 2025
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.
Frequently Asked Questions
What is the projected growth rate for cement demand in FY26?
Crisil Research projects that cement demand in India will grow by 6.5-7.5% in the fiscal year 2026.
What factors have slowed cement demand in the first half of FY25?
Weak state government spending and a slow real estate market have slowed the pace of project execution, leading to a deceleration in cement demand in the first half of FY25.
Which government programs are expected to boost cement demand?
Key government programs such as the Pradhan Mantri Awas Yojana (PMAY) and the National Infrastructure Pipeline (NIP) are expected to drive demand for cement.
How has the real estate sector contributed to the slowdown in cement demand?
The real estate sector has been grappling with high inventory levels and liquidity constraints, which have contributed to the slowdown in cement demand.
What are the long-term prospects for the cement industry?
Despite the current challenges, the long-term outlook for the cement industry remains positive, driven by government initiatives, private investment, and urbanization trends.
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