Blurb
India’s cement industry is expected to maintain 70-71 per cent capacity utilisation in FY27 as record capacity additions outpace demand growth, despite strong infrastructure and housing-driven consumption.
New Delhi
India’s cement industry is expected to maintain capacity utilization levels of around 70-71 per cent in FY27 despite healthy demand growth, as record capacity additions across the sector continue to outpace consumption growth, according to a report by Equirus Securities.
The report estimates that the cement industry expanded by approximately 6.5-7.5 per cent in FY26, while demand is projected to grow by around 5 per cent in FY27. However, the rapid pace of new capacity creation is likely to keep overall utilization rates broadly stable across the industry.
Regional trends are expected to vary, with northern and central India witnessing relatively higher utilisation levels due to stronger demand-supply dynamics. In contrast, southern markets may continue to experience moderate utilisation because of excess installed capacity and a lingering supply overhang.
Industry-wide capacity additions are projected at 42-44 million tonnes per annum (MTPA) in FY27, following an estimated 50-55 MTPA of new capacity added during FY26. These additions represent one of the largest expansion phases undertaken by the domestic cement sector in recent years.
The report highlighted that cement demand remained resilient throughout FY26, supported by strong construction activity, particularly in the post-monsoon period. Growth was driven by sustained momentum in both the housing and infrastructure segments.
The sector continues to benefit from rapid urbanisation, rising housing requirements and significant government spending on infrastructure projects, including highways, metro rail networks, industrial corridors and port development. These factors are expected to underpin long-term demand growth.
Leading cement manufacturers are also pursuing expansion through both greenfield projects and acquisitions as they prepare for future market opportunities. As new capacities become operational, companies are expected to increasingly focus on operational efficiency, asset utilisation and improving return ratios to maintain profitability.
The report noted that long-term prospects remain favourable due to initiatives such as affordable housing programmes, manufacturing investments, Smart Cities projects and the National Infrastructure Pipeline. Additionally, India’s per-capita cement consumption remains below the global average, indicating substantial scope for future growth.
With capacity additions expected to remain elevated, operational efficiency and productivity will become key differentiators for cement companies in the coming years.