Union Budget 2026-27: Cement Industry Set to Thrive with Infrastructure Expansion

The Union Budget 2026-27 has set the stage for the cement sector to capitalize on robust demand driven primarily by the government's ongoing infrastructure spending drive. With public capital expenditure increased by nearly 9% to ₹12.2 lakh crore, and effective capex touching ₹17.1 lakh crore, cement demand is expected to continue growing at a mid to high single-digit rate in the near future. Infrastructure projects, such as dedicated freight corridors, high-speed rail networks, and urban infrastructure development in Tier-2 and Tier-3 cities, will serve as a steady source of volume growth for cement producers.

Most experts predict that if project execution continues timely, cement demand could grow at a double-digit rate over the medium term. Recent structural changes are also providing a boost to cement consumption. The Goods and Services Tax (GST) regime has lowered the overall tax burden on cement to 18%, enhancing affordability and supporting demand, particularly in southern India. Volumes have been recovering since December 2025, supported by a favorable base and recent price hikes holding firm, signaling that manufacturers are gaining pricing power as demand strengthens. Additionally, rural housing and infrastructure continue to be major areas where cement consumption is concentrated, accounting for over half of total consumption.

The Cement Manufacturers’ Association (CMA) has welcomed the Union Budget 2026-27 for reinforcing the nation’s growth ambitions, balancing the aspirations of the people through inclusivity, and aligning with the vision of Prime Minister Narendra Modi for a Viksit Bharat by 2047 and Atmanirbharta. The budget underscores India’s steady economic trajectory over the past 12 years, marked by fiscal discipline, sustained growth, and moderate inflation, offering strong demand visibility for infrastructure-linked sectors such as cement.

The budget’s strong infrastructure push, with public capital expenditure rising from ₹11.2 lakh crore in fiscal year 2025-26 to ₹12.2 lakh crore in fiscal year 2026-27, recognizes infrastructure as the primary anchor for economic growth, creating positive prospects for the Indian cement industry and improving long-term visibility for the sector. The emphasis on Tier-2 and Tier-3 cities with populations above 5 lakh and the creation of City Economic Regions (CERs) with an allocation of ₹5,000 crore per CER over five years should accelerate construction activity across housing, transport, and urban services, supporting broad-based cement consumption.

Logistics and connectivity measures announced in the budget are particularly significant for the cement industry. The announcement of new dedicated freight corridors, the operationalization of 20 additional National Waterways over the next five years, the launch of the Coastal Cargo Promotion Scheme to raise the modal share of waterways and coastal shipping from 6% to 12% by 2047, and the development of ship repair ecosystems should enhance multimodal freight efficiency, reduce logistics costs, and improve the sector’s carbon footprint. The announcement of seven high-speed rail corridors as growth corridors can be expected to further stimulate regional development and construction demand.

Mr. Parth Jindal, President of the Cement Manufacturers’ Association (CMA), commented on the budget, stating, “As India advances towards a Viksit Bharat, the three kartavya articulated in the Union Budget provide a clear context for the nation’s growth and aspirations, combining economic momentum with capacity building and inclusive progress. The CMA appreciates the Union Budget 2026-27 for the continued emphasis on manufacturing competitiveness, urban development, and infrastructure modernization, supported by over 350 reforms spanning GST simplification, labor codes, quality control rationalization, and coordinated deregulation with states. These reforms, alongside the budget’s focus on Youth Power and domestic manufacturing capacity under Atmanirbharta, stand to strengthen the investment environment for capital-intensive sectors such as cement. The Union Budget 2026-27 reflects the government’s focus on infrastructure-led development emerging as a structural pillar of India’s growth strategy.”

Dr. Raghavpat Singhania, Vice President of CMA, added, “The government’s sustained infrastructure push supports employment, regional development, and stronger local supply chains. Cement manufacturing clusters act as economic anchors across regions, generating livelihoods in construction, logistics, and allied sectors. The budget’s focus on inclusive growth, execution, and system-level enablers creates a supportive environment for responsible and efficient expansion, offering opportunities for economic growth and lending momentum to the cement sector. The increase in public capex to ₹12.2 lakh crore, the focus on Tier-2 and Tier-3 cities, and the creation of City Economic Regions stand to strengthen the growth of the cement sector. We welcome the budget’s emphasis on tourism, cultural, and social infrastructure, which should broaden construction activity across regions. Investments in tourism facilities, heritage and Buddhist circuits, regional connectivity in Purvodaya and North Eastern States, and the strengthening of emergency and trauma care infrastructure in district hospitals reinforce the cement sector’s role in enabling inclusive growth.”

The ₹20,000 crore Carbon Capture, Utilization, and Storage (CCUS) outlay for various sectors, including cement, fundamentally alters the decarbonization landscape for India’s emissions-intensive industries. CCUS is a significant enabler for large-scale decarbonization of industries such as cement and directly addresses the technology and cost requirements of the cement sector in this context. The cement industry, fully aligned with the government of India’s Net Zero commitment by 2070, views this support as critical to enabling the adoption and scale-up of CCUS technologies while continuing to meet the country’s long-term infrastructure needs.

The CMA notes positively the government’s continued commitment to fiscal discipline, with the fiscal deficit estimated at 4.3% of GDP for fiscal year 2026-27, reinforcing macroeconomic stability and investor confidence. As India progresses towards Viksit Bharat 2047, the cement industry reaffirms its commitment to working closely with the government to build resilient, sustainable, and inclusive infrastructure that supports long-term national development.