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Outbreak of the COVID-19 pandemic in the Indian sub-continent which forced the government to announce a nationwide lockdown, 25th March 2020 onwards affected the domestic cement production during FY20. Construction activity across the country was halted, which is normally at its peak in the month of March, affected the cement offtake. Production fell by 24.7 percent during March 2020 as compared with the 15.7 percent growth achieved during March 2019.
Capacity
As per Cement Manufacturers Association, India accounts for over 8% of the overall global installed capacity. Region wise, the Southern region comprises of 35% of the total cement capacity followed by the Northern, Eastern, Western and Central region comprising of 20%, 18%, 14% and 13% of the capacity respectively.
Chart 2:
Installed capacity and Capacity Utilization rate of Cement Manufacturers (Unit: Million Tonnes) Installed Capacity of domestic cement manufacturers has increased at a CAGR of 7.1 % during FY16-20. Manufacturers have been able to maintain a capacity utilization rate above 65 % between FY15-19 but prolonged rains in many parts of the country and with the temporary closure of cement plants during the government enforced lockdown has led to the capacity utilization rate to fall from 70 % during FY19 to 61 percent during FY20.
Demand Drivers for the Cement Industry
Cement demand is closely linked to the housing and infrastructure sector. Increasing demand coming from affordable housing and construction work for government infrastructure projects like roads, metros, airports, irrigation etc. should ideally support the demand for cement going forward.
Chart 3:
Key growth drivers for the Cement Industry
National Infrastructure Pipeline: Of the total projects of the NIP, 42% are under implementation while 19% are under development, 31% are at the conceptual stage and 8% are yet to be classified. The sectors that will be of focus will be roads, railways, power (renewable and conventional), irrigation and urban infrastructure. These sectors together are to account for 79% of the proposed investments in the 6 years period to 2025. Given the government’s thrust on infrastructure creation, it is likely to benefit the cement industry going forward.
Affordable Housing: Under the Pradhan Mantri Awaas Yojana (PMAY) the centre had introduced the credit link subsidy scheme, in May 2017, which was initially extended till March 31st, 2020 but now has been extended for one more year till March 2021. The credit link subsidy scheme has benefitted 3.3 lakh families till now and aims to benefit another 2.5 lakh to get affordable houses.
Prices of cement
Source: CMIE
Chart 4
Trend in prices
Wholesale and retail prices have increased by 11.7% and 12.5% during FY20. Prices have started correcting Q4FY20 onwards due to revival in demand due to given the restart of major infrastructure projects, new launches, pick-up in the real-estate demand in urban areas and announcement of the NIP.
Financials The overall sales revenue has increased by only 1.3% during FY20 as compared with the 24.4% growth rate achieved during FY19. Overall expenditure has declined by 4.5% which has benefitted the industry largely given the moderation in sales. Selling and distribution, cost of raw materials and fuel/electricity cost encompass around 70% of the total expenses for cement manufacturers.
– Electricity and fuel cost have declined by about 12.7% during FY20 due to the sharp drop in crude oil prices.
– Logistics costs which are the biggest cost for cement industry has also dropped by 7.9% (selling and distribution) as the railways extended the benefit of exemption from busy season surcharge.
– Cost of raw materials too declined by 4.4% given the price of limestone of had also fallen by 9.6% during FY20
Outlook for FY21
Cement production is to fall sharply by 25-30% during FY21 and capacity utilization is to be around 40-45%.This will be the steepest ever fall in production (and capacity utilisation) that the industry has ever witnessed. Production of cement has fallen by 0.8% during FY20 as against the grown of 13.3% during FY19.
Cement manufactures are not expected to make any additions to the existing CAPEX and given the limited demand present there has also been CAPEX deferral announcements.
The nationwide lockdown has come at the time when construction activities is at its peak and it will be followed by the monsoon season where again the construction activity will be impacted thereby affecting entire dynamics of demand-supply for cement.
Towards Recovery Partial Recovery Stressed
Given the weakness in end user demand due to the lack of activity in the housing and infrastructure sector the cement industry is expected to remain in the red zone till October 2020 at least, till the end of the monsoon season. Partial recovery is expected November 2020 onwards and normalisation of operations post January 2021 onwards.
Jignesh Kundaria, Director and CEO, Fornnax Technology
India is simultaneously grappling with two crises: a mounting waste emergency and an urgent need to decarbonise its most carbon-intensive industries. The cement sector, the second-largest in the world and the backbone of the nation’s infrastructure ambitions, sits at the centre of both. It consumes enormous quantities of fossil fuel, and it has the technical capacity to consume something else entirely: the waste our cities cannot get rid of.
According to CPCB and NITI Aayog projections, India generates approximately 62.4 million tonnes of municipal solid waste annually, with that figure expected to reach 165 million tonnes by 2030. Much of this waste is energy-rich and non-recyclable. At the same time, cement kilns operate at material temperatures of approximately 1,450 degrees Celsius, with gas temperatures reaching 2,000 degrees. This high-temperature environment is ideal for co-processing, ensuring the complete thermal destruction of organic compounds without generating toxic residues. The physics are in our favour. The infrastructure is not.
Pre-processing is not the support act for co-processing. It is the main event. Get the particle size wrong, get the moisture wrong, get the calorific value wrong and your kiln thermal stability will suffer the consequences.
The Regulatory Push Is Real
The Solid Waste Management (SWM) Rules 2026 mandate that cement plants progressively replace solid fossil fuels with Refuse-Derived Fuel (RDF), starting at a 5 per cent baseline and scaling to 15 per cent within six years. NITI Aayog’s 2026 Roadmap for Cement Sector Decarbonisation targets 20 to 25 per cent Thermal Substitution Rate (TSR) by 2030. Beyond compliance, every tonne of coal replaced by RDF generates measurable carbon reductions which is monetisable under India’s emerging Carbon Credit Trading Scheme (CCTS). TSR is no longer a sustainability metric. It is a financial lever.
Yet our own field assessments across multiple Indian cement plants reveal a sobering reality: the primary barrier to scaling AFR adoption is not waste availability. It is the fragmented and under-engineered pre-processing ecosystem that sits between the waste and the kiln.
Why Indian Waste Is a Different Engineering Problem
Indian municipal solid waste is not the material that imported shredding equipment was designed for. Our waste streams frequently exceed 40 per cent to 50 per cent moisture content, particularly during monsoon cycles, saturated with abrasive inerts including sand, glass, and stone. Plants relying on imported OEM equipment face months of downtime awaiting proprietary spare parts. Machines built for segregated, low-moisture waste fail quickly and disrupt the entire pre-processing operation in Indian conditions.
The two most common failures we observe are what I call the biting teeth problem and the chewing teeth problem. Plants relying solely on a primary shredder reduce bulk waste to large fractions, but the output remains too coarse for stable kiln combustion. Others attempt to use a secondary shredder as a standalone unit without a primary stage to pre-size the feed, leading to catastrophic mechanical failure. When both stages are present but mismatched in throughput capacity, the system becomes a bottleneck. Achieving the 40 to 70 tonnes per hour required for meaningful coal displacement demands a precisely coordinated two-stage process.
Engineering a Made-in-India Answer
At Fornnax, our response to these challenges is grounded in one principle: Indian waste demands Indian engineering. Our systems are built around feedstock homogeneity, the holy grail of kiln stability. Consistent particle size and predictable calorific value are the foundation of stable kiln combustion. Without them, no TSR target is achievable at scale.
Our SR-MAX2500 Dual Shaft Primary Shredder (Hydraulic Drive) processes raw, baled, or loosely mixed MSW, C&I waste, bulky waste, and plastics, reducing them to approximately 150 mm fractions at throughputs of up to 40 tonnes per hour. The R-MAX 3300 Single Shaft Secondary Shredder (Hydraulic Drive), introduced in 2025, takes that primary output and produces RDF fractions in the 30 to 80 mm range at up to 30 tonnes per hour, specifically optimised for consistent kiln feeding. We have also introduced electric drive configurations under the SR-100 HD series, with capacities between 5 and 40 tonnes per hour, already operational at a leading Indian waste-processing facility.
Looking ahead, Fornnax is expanding its portfolio with the upcoming SR-MAX3600 Hydraulic Drive primary shredder at up to 70 tonnes per hour and the R-MAX2100 Hydraulic drive secondary shredder at up to 20 tonnes per hour, designed specifically for the large-scale throughput that higher TSR ambitions require.
The Investment Case Is Now
The 2070 Net-Zero target is not a distant goal for India’s cement sector. It starts today, with decisions being made on the plant floor.
The SWM Rules 2026 are already in effect, requiring cement plants to replace coal with RDF. Carbon credit markets are opening up, and coal prices are not going to get cheaper. Every tonne of coal a cement plant replaces with waste-derived fuel saves money on one side and generates carbon credit revenue on the other. Pre-processing infrastructure is no longer just a compliance requirement. It is a business investment with a measurable return.
The good news is that nothing is missing. The technology works. The waste is available in every Indian city. The government has provided the policy direction. The only thing standing between where the industry is today and where it needs to be is the commitment to build the right infrastructure.
The cement companies that move now will not just meet the regulations. They will be ahead of every competitor that waits.
About The Author
Jignesh Kundaria is the Director and CEO of Fornnax Technology. Over an experience spanning more than two decades in the recycling industry, he has established himself as one of India’s foremost voices on waste-to-fuel technology and alternative fuel infrastructure.
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