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The Indian cement industry is gearing up for a substantial expansion, planning to add 160-170 MT of grinding capacity between fiscal 2026 and 2028 with an investment of around INR 1.2 lakh crore. This growth is largely supported by strong demand, high capacity utilisation, and industry consolidation. Most of the expansion will be through brownfield projects, reducing risk and capital requirements. Companies are also investing in green energy and efficiency improvements. Financial leverage is expected to remain stable, keeping credit profiles steady while supporting long-term profitability.
The Indian cement sector is preparing for significant growth, planning to add a grinding capacity of 160-170 million tonnes (MT) between fiscal 2026 and 2028, with an estimated capital expenditure of around INR 1.2 lakh crore, according to a report by Crisil. This upcoming expansion is nearly 75 per cent higher than the 95 MT added in the previous three fiscal years. Advertisement
Crisil highlighted that the growth is primarily driven by a healthy demand outlook and high capacity utilisation across the industry. While this expansion will require substantial investment, the associated risks are expected to be lower as most of the projects are brownfield in nature and a large portion of the funding will come from the industry's strong operating cashflows.
The report indicates that the financial leverage of cement companies, measured through the net debt to Ebitda ratio, is likely to remain stable, supporting their credit profiles. The analysis is based on 17 major cement producers, which together account for 85 per cent of the 668 MT installed capacity as of March 2025.
Industry consolidation is also a key trend, with the top five producers acquiring smaller players alongside their brownfield expansions. In the past three fiscal years, the sector recorded robust demand, achieving a compound annual growth rate (CAGR) of 9.5 per cent in volumes, primarily driven by infrastructure and housing segments. Capacity utilisation rose to 70 per cent last fiscal, above the decade-long average of 65 per cent.
Crisil's report notes that 65 per cent of the planned capacity additions will come from brownfield projects. These projects typically have shorter construction timelines, require less land acquisition, involve lower capital costs, and face fewer implementation challenges. The projected INR 1.2 lakh crore capex is about 50 per cent higher than spending in the previous three fiscal years and will mainly fund capacity growth.
Additionally, 10-15 per cent of the total investment will be allocated to green energy initiatives and cost efficiency projects, which are expected to support profitability in the coming years.
Source PTI
5th Jun, 2025
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