**Cement Demand in India Set to Rise Amid Infrastructure Growth**
Cement demand in India is projected to grow at a compound annual growth rate (CAGR) of 7-8%, outpacing real GDP growth by 1.0-1.2 times in the medium term, driven by rural and urban housing, infrastructure, and commercial projects. A recent report by UBS indicates that capacity additions in the Indian cement sector are expected to accelerate across various regions starting in the last quarter of the Financial Year (FY) 2025.
In the eastern market, demand has seen a significant decline due to early monsoon rains, although prices have remained stable at ₹353 per bag. Conversely, in the southern region, prices have risen by ₹10 per bag despite the ongoing monsoon season. The report anticipates that prices will improve in FY26 and FY27 following a sharp decline in FY25.
The medium to long-term outlook remains positive, with expectations of strong pricing due to industry consolidation and fewer market players. The report states, “We remain constructive on demand and expect volume to grow 1.0-1.2 times the rate of growth in real GDP over the medium term. We see margin tailwinds and expect costs to keep coming down in the next two to three years.”
Despite a flat performance in August compared to the previous month, cement prices have shown strength year-on-year. The monsoon season has slowed construction activities, particularly in rural areas and infrastructure projects, leading to weaker demand and limiting companies’ pricing power. According to data from the Ministry of Commerce & Industry, cement production increased by 11.7% in July 2025 compared to the same month last year, with a cumulative index rise of 8.9% from April to July 2025-26.
In conclusion, while the immediate outlook for cement prices may be modest due to strong capacity additions in FY26-27, the long-term prospects for margins and return ratios remain optimistic, bolstered by ongoing consolidation in the sector.
**FAQ**
**What factors are driving the growth of cement demand in India?**
Cement demand in India is primarily driven by increased investments in rural and urban housing, infrastructure, and commercial projects, alongside expected capacity additions in the sector.