India’s cement industry is expected to record steady growth over the coming years, with cement volumes projected to expand by 6–7 per cent in FY27, supported by sustained demand from the housing and infrastructure sectors, according to a report by rating agency ICRA.

The agency said the sector is likely to maintain healthy momentum after registering growth of 6.5–7.5 per cent in FY26, despite a higher base in the second half of FY25. Cement demand remained strong in the current financial year, with volumes increasing by 8.5 per cent during the first eight months of FY26, driven by robust construction activity across regions.

ICRA expects demand to strengthen further in the second half of FY26 as construction activity accelerates after the monsoon. Continued government focus on infrastructure spending and the possibility of a reduction in goods and services tax on cement are also expected to support demand through FY26 and FY27.

Against this favourable demand backdrop, cement manufacturers are continuing to expand capacity through both organic and inorganic routes to strengthen their market positions. The industry is estimated to add 85–90 million tonnes per annum of capacity during FY26–FY27, including around 43–45 million tonnes per annum in FY26 and a further 42–44 million tonnes per annum in FY27.

Commenting on the outlook, Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings at ICRA, said sector profitability is expected to improve significantly in FY26, supported by better pricing and higher volumes. Operating profit before interest, depreciation, tax and amortisation per tonne is projected to rise to around Rs 900–950 per tonne in FY26, compared with Rs 810 per tonne in FY25.

However, ICRA expects some moderation in earnings in FY27 due to rising input costs. Operating profit per tonne is estimated at Rs 880–930 in FY27, as costs related to pet coke and freight are likely to increase and remain influenced by global crude oil prices and geopolitical developments.

On a regional basis, North and Central India are expected to report capacity utilisation levels above the national average, while the southern region may continue to see relatively moderate utilisation due to existing capacity overhang. ICRA noted that recent merger and acquisition activity in the southern market has helped large players strengthen their regional and pan-India presence.

Overall capacity utilisation for the cement industry is projected to remain stable at around 70–71 per cent in FY27, broadly in line with FY26 levels, albeit on an expanded capacity base.

The Global Cement and Concrete Association (GCCA) India–NCB Carbon Uptake Report was recently released during the 63rd Foundation Day celebrations of the National Council for Cement and Building Materials (NCB). On the occasion, a Gypsum Board Testing Laboratory and a Micro-Characterisation Laboratory were also inaugurated, strengthening India’s research and quality infrastructure for construction materials.

The laboratories were inaugurated by Urmila, Economic Advisor, Department for Promotion of Industry and Internal Trade (DPIIT), and Mohd. Kamal Ahmad, Special Director General, Central Public Works Department (CPWD), in the presence of L. P. Singh, Director General, NCB.

The newly established Gypsum Board Testing Laboratory will support quality assurance and standardisation requirements of the gypsum board industry, particularly in the context of the Gypsum-Based Building Materials (Quality Control) Order, 2024. The Micro-Characterisation Laboratory is equipped with advanced analytical tools for detailed investigation of cementitious and construction materials.

Addressing the gathering, Ms Urmila highlighted NCB’s sustained contributions to research, technology development, quality assurance and capacity building for the cement sector. Shri Mohd. Kamal Ahmad also commended NCB’s role in promoting sustainable construction practices through focused research and development.

The GCCA India–NCB report titled Carbon Uptake by Concrete assesses CO? uptake through carbonation in concrete under Indian conditions. Prepared in collaboration with the Global Cement and Concrete Association (GCCA) India, the study is based on the Tier-I methodology of IVL Swedish Environment Research Institute. It notes that while the cement industry contributes around seven per cent of global anthropogenic emissions, carbon uptake by concrete can partially offset process-related emissions.

The report outlines future actions to improve data robustness, refine estimation methodologies and support integration of carbon uptake into national sustainability and climate reporting frameworks. It will be submitted to the Ministry of Environment, Forest and Climate Change for consideration of inclusion as a carbon sink in India’s National Communications to the UNFCCC.

Shree Cement Ltd has announced an investment of Rs 20 billion to set up a new cement plant in Maharashtra, the country’s third-largest cement maker said on Friday at the World Hindu Economic Forum (WHEF) 2025. The letter of intent for the proposed investment was signed in the presence of Maharashtra Chief Minister Devendra Fadnavis in Mumbai. Shree Cement chairman Hari Mohan Bangur said the company will establish a 2 million tonnes per annum plant in Chandrapur district, where land has already been acquired. He added that the project is awaiting environmental clearance and, once approved, is expected to be completed within two years. The expansion will be funded through internal cash reserves, with the company reporting a cash balance of Rs 65.41 billion at the end of FY25.

Shree Cement currently has an installed capacity of 62.8 million tonnes per annum. During the second quarter of FY26, the company commissioned a 3.65 mtpa clinker unit at Jaitaran in Rajasthan, while a 3 mtpa cement mill at the same location is expected to start operations shortly. A 3 mtpa integrated plant at Kodla in Karnataka is in the final stages of development and is scheduled to be commissioned within the third quarter of FY26. Following these ongoing expansions, the company’s total capacity is expected to rise to 68.8 mtpa, according to an ICICI Direct Research note dated 29 October.

Analysts estimate that Shree Cement’s capacity could reach between 72 and 75 mtpa by FY27E, with further potential to scale up to 80 mtpa by FY28E or FY29E, depending on demand trends. However, market observers have flagged medium-term risks, noting that industry-wide capacity additions may outpace demand growth through FY28-29, particularly in northern and western India where significant new capacity is expected. At the same time, cement prices declined sharply in the third quarter, especially in eastern and southern regions, though analysts expect some recovery from January, led by the South and East.

The announcement comes amid aggressive expansion plans by larger peers. UltraTech Cement recently raised its capacity target from 167 mtpa to 240 mtpa by FY28, while the Adani Group increased its cement capacity target by nearly 10 per cent to 155 mtpa by the same period. Shree Cement reported a 15 per cent year-on-year rise in revenue to Rs 43.03 billion in the September quarter, driven by higher volumes, premiumisation efforts and a value-over-volume strategy. The company’s chief financial officer Ashok Bhandari has guided for capital expenditure of around Rs 30 billion in FY26-27, with a similar level expected in FY27-28. Shares of Shree Cement ended 0.18 per cent lower on Friday, while the benchmark Sensex closed 0.53 per cent higher.