Infrastructure Projects Give Major Push to Indian Cement Industry

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Researched by Industrial Info India (Delhi, India)--India, with an installed cement production capacity of about 236 million tons in 2009-10, is the second-largest cement producer in the world. The sector is expected to add an additional 92.3 million tons of capacity by 2013. As a result, the industry will have a total installed capacity of 383.5 million tons by March 2013. The total cement production for April 2010 to January 2011 reached 136.51 million tons, compared to 130.85 million tons in the corresponding period of the previous fiscal year.

The per capita consumption of cement in India is 156 kilograms per year--well below the global average per capita consumption of 390 kilograms per year. This implies that there is a huge gap to be covered, which includes the housing needs for much of the population. The housing sector accounts for almost 50% of the total cement consumption of the country. Also, the government is giving impetus to infrastructure projects in the country. Finance Minister Pranab Mujherjee has proposed to earmark $47 billion for infrastructure development in fiscal year 2011-12.

The Ministry of Road Transport and Highways has planned to invest $354 billion in road infrastructure by 2012. Road construction will continue to fuel the demand for cement in the future. The infrastructure sector has received many incentives from the government. These include increased funds, tax-related incentives and formulating a comprehensive policy for developing public-private partnership projects.

To meet this demand, many Indian companies are focusing on capacity expansion projects and grassroot cement plants. Lafarge India Private Limited (Mumbai) plans to construct a grassroot cement plant in Alsindhi, with a total investment of $163 million. Binani Cement (Mumbai) is looking to increase its capacity with a grassroot cement plant in Lodhwa, Gujrat, with investment of $183 million.

Although the industry has huge growth potential, it is also facing some challenges. The rising costs of energy and transportation continues to pressure the industry as a whole. The industry additionally needs to developing human resources that will be capable to meeting the increased professional needs during this period of rapid growth.

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