Although the thriving Indian cement industry is geared up to experience more growth in coming years, it may experience tough challenges as well.
As per the data released by the Cement Manufacturers Association, the production of cement in India, the second largest producer after China in the world, reached 160.31 Million Tonnes during FY 2009-10, up 12.37% from 142.65 Million Tonnes in FY 2008-09, as per the news published by livemint
Growth was also recorded in sales, which increased by 12% to 159.43 Million Tonnes from 142.23 Million Tonnes during the review period.
Real estate boom, increased spending in the infrastructure by the government as well as the private sector, and elevated spending by the Indian government on different social programs are the main factors propelling the growth in the cement sector.
Furthermore, the growth in demand for cement stayed at a hefty 8.4% even in 2008-09, when the economy was battling with the financial meltdown. The cement consumption further surged in 2009-10, reporting an average 12.5% increase during the first 8 months. This growth was backed by substantial spending in the infrastructure, particularly by the government sector.
The Indian cement industry is projected to experience growth in the years to come. According to a market research report named “Indian Cement Industry Forecast to 2012
” by RNCOS
, cement production in India is expected to increase at round 11% CAGR between FY 2009-10 and FY 2011-12, to reach nearly 240 Million Metric Tons.
Industry experts, commenting on the performance shown by the cement industry, said that 2009 was the toughest year, and total demand was strong in December 2009. As of now, cement and building materials that are manufactured in India are superior in quality that match international standards and are able to contend in the global market.
According to the Research Analyst at RNCOS
, “The Indian cement industry will continue to get support from the sustained demand as a result of government support and infrastructure development. However, the rates of key inputs like slag, coal, gypsum, petroleum products and fly ash have started rising, and are anticipated to become tougher in the coming years. In addition to this, raw material availability continues to present challenges to the sector, which could indeed leave an unfavorable impact on the Indian cement industry.”
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