There has been a surge in the demand for construction materials all over the world due to rapid urbanization. This demand has risen due to the growth of the new housing but, restoration projects also have a positive effect as both public and private restoration jobs are increasing. The advancement in the technology is also expected to give a further boost in the demand. However, the growth of the global cement market has hit a roadblock because of the strict regulations and the fast diminishing fossil fuel reserves. The price of the cement is under severe pressure all over the world due to the constant shortage of demand that occurred since 2008 financial crisis. With number of environmental issues, sustainability concerns and negative image of the cement industry has become a major challenge for its growth.
The cement sector of India has a bad reputation because of sunken investment in large amount. This image has been mainly responsible for the slowdown of the construction industry in the country. The cement industry of India currently sits at 100 metric tons per year of excess production capacity. Even though that has been strong growth in domestic consumption and its export, the cement market of India has still surplus supply with a comparatively low urbanization rate of 70 percent. Previously there was a forecast that the market will not grow beyond four percent for the financial year of 2017 to 2018.
The future of Indian cement industry is also filled with numerous challenges which can create obstacle in the path of its growth. It could affect the sector both domestically and internationally. The problem can happen due to both supply side and the demand side of the market. The supply side of the market includes factors like increased production cost linked with remuneration of the employees and worldwide increase in energy prices. The demand side includes low domestic requirement which is triggered by oversupply of houses and the prevailing economic condition. However, there are some specific areas in India where growth has taken place without any type of restrictions due to many sorts of supportive factors. There is an expectation that there will be more construction of residential houses and commercial buildings in the future which shall boost the cement industry in India.
Globally, India stands as the second largest cement producer. That is why the cement industry is so important for the economy of India. The cement industry has employed more than a million people, directly or indirectly. Since the deregulation of cement in 1982, the cement industry was able to attract a large amount of investment both from domestic and foreign investors. There is still a lot of potential for the development of infrastructure and construction sector, and it is expected that it will prove beneficial for the cement industry.
There is a plan to build more than 98 smart cities which will give a boost to this sector greatly. In India, there are some major players in cement industry like Birla, Ambuja cement, JK cement, and Bangor cement. Now some foreign manufacturers have also invested in this sector recently like Heidelberg Cement, Lafarge-Holcim and Vicat. The cement production in India stood at 502 million tons per year in 2018. An additional capacity of 20 million tons per annum is expected by FY-19 to FY-21. There are many opportunities for the cement industry in the future due to the planning of dedicated freight corridor, government’s housing plans, development of ports and other infrastructure projects. If the current demand continues, then the cement production will reach 550-600 million tons per annum (MTPA) by the year 2025.