In recent years, the cement industry has experienced a moderation in capacity utilisation attributed to the surplus addition of new capacity compared to the pace of demand growth. Between FY15 and FY20, the industry witnessed a substantial addition of about 103 million tonnes per annum (mtpa) in capacity, outstripping the growth in demand which stood at 66 mtpa during the same period. This imbalance has been a key factor in the current scenario of subdued demand, exacerbated by the anticipation of a slowdown due to the forthcoming general elections.
Despite the short-term challenges, there are indications of optimism within the industry. Cement companies are implementing price hikes across India, signalling their confidence in a demand revival. This move comes after a period of pressure on prices due to weakened demand. Experts foresee this weakness in prices as short-lived, fuelled by hopes of demand resurgence.
Moreover, industry players remain committed to their long-term growth strategies, as evidenced by ongoing capital expenditure plans. Companies like UltraTech Cement are earmarking substantial investments towards capacity expansion, reflecting their confidence in the sector’s potential.
Looking ahead, the post-election period is expected to witness a resurgence in construction activities, buoyed by government initiatives and policies. The inauguration of new cement plants, such as the one by Shree Cement in Guntur, underscores the industry’s commitment to generating employment opportunities and further strengthening manufacturing capacities.
While short-term challenges persist, the cement industry remains resilient, supported by anticipated demand recovery, strategic pricing manoeuvres, and sustained investment in capacity expansion. As the new government assumes office and construction activities regain momentum, the industry is poised for renewed growth and stability.