India’s cement capacity to add 160-170 mil mt in FY 2026-28: CRISIL

India's cement industry is poised to add a grinding capacity of 160-170 million metric tons between fiscal years 2026-28, fueled by healthy demand outlook and high capacity utilization, according to a report by CRISIL, majority owned by S&P Global, Nov. 12.

The projected capacity addition is up 75% from the 95 million mt added in the past three fiscals.

"Over fiscals 2026-28, the cement makers are expected to see healthy incremental demand of 30-40 million mt annually, prompting a strong growth in capacities," Anand Kulkarni, Director of CRISIL Ratings, said. "The distribution of incremental capacities may not be linear though."

"This fiscal is likely to see commissioning of 70-75 million mt, which could moderate capacity utilization in the near term," Kulkarni added. "All the same, over the three fiscals, demand is expected to be commensurate with supply addition bringing utilization back to around 70%."

In the past three fiscals, cement saw robust demand – with volume clocking compound annual growth rate of 9.5%, driven by key segments such as infrastructure and housing, resulting in a capacity utilization of around 70% in the last fiscal, compared with a decadal average of 65%, the report said.

CRISIL notes that two-thirds of the incremental capacity over 2026-28 is expected to be in the form of split grinding units located away from the main clinker production facility.

While this will entail substantial capital expenditure, the risks associated is expected be lower because a sizeable proportion is brownfield and majority of the expansion will be funded from healthy operating cashflows, the report said.

Consequently, the financial leverage of cement makers, as measured by the net debt to earnings before interest, taxes, depreciation and amortisation ratio, will be steady and keep credit profiles stable.

Meanwhile, cement demand in neighbor China is seen declining to 1.2 billion mt in 2025, and 900,000 mt by 2050, reflecting lower per capita consumption and decline in population, Platts reported Nov. 11.

Earlier, the World Cement Association raised alarm regarding a potential 3 to 4 times increase in cement prices due to European decarbonization policies.

The decarbonization measures will place a significant cost burden on the construction sector and end consumers, with carbon pricing becoming a selling imperative for price increases across the industry, Emir Adiguzel, WCA director, said.

India's cement exports are primarily destined for Asian markets and predominantly South Asia, with only marginal volume of outflows to European buyers like Germany and Netherlands.

Platts, part of S&P Global Commodity Insights, assessed Cement Clinker FOB Turkey at $44.5/mt Nov. 6, up 50 cents/mt from the previous assessment.