Connect with us

Economy & Market

Cement, IIP and “Make in India”

Published

on

Shares

The program called "Make in India" was intended to give a much-needed push to the manufacturing sector in India. The obvious objective was to grow the share of manufacturing in our GDP from a nondescript 15 per cent to a shining 25 per cent, which in turn would mean generation of new jobs by the millions – since manufacturing has been assumed to be labour-intensive, according to traditional wisdom – and no one can fault the relevance of the idea to our economy.

However, judging by the way the Index of Industrial Production (IIP) has moved in the last two years, this crucial program is yet to find its feet, leave alone delivering any noteworthy results on the ground. This could be because this good idea has neither been backed up by anywhere near an equally good strategy, nor by a good measure of execution. The challenging task is to translate such visionary concepts into well-coordinated policies and actions, which has not fructified yet.

To be credible, we must work with data, and there is no reason why we should not analyse this issue with reported numbers in public domain. During the so-called period of reforms in India from 1991 to 2014, the manufacturing sector did grow at a CAGR of about 7.5 per cent, if we took the average of IIP numbers and the Annual Survey of Industries. Even if we were to take the shorter and more recent period of 2005 to 2014, IIP throws up an average annual historical growth rate of 5.7 per cent. Contrast this with a dismal IIP growth of 3.5 per cent in FY15, 4.6 per cent in FY16 and a shocking 0.4 per cent in 11 months of FY17.

If one were to go by any kind of quantification and measurement of outcomes by data, the conclusion about success or otherwise, of "Make in India" will be very obvious. Add to this the facts that credit growth has stagnated, industrial capacity utilisations have fallen and merchandise exports have declined, and you have a clearer picture of what is happening with "Make in India".

How does cement figure in all this? Eight "Core" industries comprise nearly 38 per cent of the weightage of items included in the IIP. These are Coal, Crude Oil, Natural Gas, Petroleum Refinery Products, Fertilizers, Steel, Cement and Electricity. No wonder then, that some people say consumption of Steel, Cement and Electricity reflects the progress of a nation, although in today’s age of Internet and start-ups and artificial intelligence, this may sound too sedate and conventional.

While we do seem to know, that the steel cement and power sectors have not exactly covered themselves in glory during these "Make in India" years, let us take a look at the cement industry’s numbers.

There were days (and years) in the bygone past, when we used to have a strong correlation between GDP growth numbers and growth of cement consumption. In the post-decontrol era, from 1992 to 2012, cement demand has grown at a CAGR of 7.4 per cent as against a GDP growth CAGR of 7 per cent for the same period, showing a strong linkage between progress of the economy and consumption of cement, which is logical. Then came a new method of calculating GDP growth (which catapulted India to the exotic position of the fastest-growing country on Earth) and also came the launch of "Make in India" to give a boost to manufacturing, and this realistic and elegant relationship between growth of the economy and growth of cement got severed.

So, you now have an unusual situation during FY14 through FY17, when the GDP growth numbers per year were a very robust and healthy 7.3 per cent to 7.9 per cent, but cement consumption growth disappointed, with much lower growth figures of 4 per cent, 4.5 per cent and 1 per cent respectively.

Data can sometimes reveal the truth and sometimes hide it, depending on how we present it. But, to the best of my knowledge and belief, cement consumption growth figures, being based on absolute numbers, wouldn’t lie.

Sumit Banerjee Chairman, Editorial Advisory Board

Concrete

Holcim UK drives sustainable construction

Published

on

By

Shares

Holcim UK has released a report titled ‘Making Sustainable Construction a Reality,’ outlining its five-fold commitment to a greener future. The company aims to focus on decarbonisation, circular economy principles, smarter building methods, community engagement, and integrating nature. Based on a survey of 2,000 people, only 41 per cent felt urban spaces in the UK are sustainably built. A significant majority (82 per cent) advocated for more green spaces, 69 per cent called for government leadership in sustainability, and 54 per cent saw businesses as key players. Additionally, 80 per cent of respondents stressed the need for greater transparency from companies regarding their environmental practices.

Image source:holcim

Continue Reading

Concrete

GCCA releases LCR system

Published

on

By

Shares

The Global Cement and Concrete Association (GCCA) has launched the Low Carbon Ratings (LCR) system for cement and concrete, a new global rating based on products’ carbon footprints. The system uses a clear AA to G scale to help customers prioritise sustainability in material selection across construction sectors worldwide. The GCCA says that the LCR system is designed to be easily recognisable, with a simple visual graphic that indicates a product’s rating and provides consistency and comparability to other products.

Image source:highways.today

Continue Reading

Concrete

FLSmidth opens eco-friendly plant in Casablanca

Published

on

By

Shares

FLSmidth has inaugurated a €21 million mill liner manufacturing plant in Casablanca, covering 11,250m² with a production capacity of 6,500 tonnes annually. The LEED-certified facility significantly reduces carbon emissions by up to 56 per cent and fully recycles water used in the manufacturing process. Up to 250 jobs will be created in the Valparaíso region. Mikko Keto, CEO, highlighted the plant as a symbol of FLSmidth’s commitment to sustainable mining and community engagement in South America. Earlier in 2024, the Denmark-based company announced plans to sell its cement division to sharpen its focus on mining operations.

 

Continue Reading

Trending News