background paper – cement

Cement

2© Confederation of Indian Industry

Contents

Sectoral Overview The Potential Existing Enablers Major Challenges Faced


Sectoral Snapshot

2nd

Largest producer in the world

6.7%CAGR of Production

over FY07-15

Direct Employment to ~150,000 & Indirect

Employment to ~500,000 people

> USD 3 bnFDI inflow to sector

April 2000 – Dec 2015

Source – IBEF, International Journal of Emerging Research in Management &Technology

1.5% Contribution to

India’s GDP

~7%Share in global

production


Advantage India

Infrastructure Growth

Robust and high infrastructure growth in 12th Five Year Plan

Potential

Indian cement market is expected to reach a production capacity of 550 MTPA by 2025 from existing capacity of 390 MTPA

Source – CII-AT Kearney Cement Vision 2025; Planning Commission, IBEF

Key Drivers of Demand

Housing – 67% Infrastructure – 13%Commercial construction – 11%Industrial construction – 9%

Policy Initiatives

Flagship programs like Smart Cities, Housing for All, AMRUT to give impetus to demand; Adoption of cement for construction of all new road projects


Existing Enablers

Policy and Eco-system

Budget 2016-17 has proposed 100 per cent deduction for profits to an

undertaking in housing project for select accommodation.

Allocation of Rs 7,296 crore towards Urban Rejuvenation Mission (AMRUT and Smart Cities).

Rise in allocation under Pradhan Mantri Gram Sadak Yojana (PMGSY) to Rs 19,000 crore (US$ 2.79 billion) for FY17.

Industry Evolution and Capabilities Has always grown at a higher pace than the

economy of India Return on Investment is high and stable Low per-capita consumption showcases the

potential for this sector. Huge Export potential considering the Middle

East market. Being a mature industry, availability of skilled

human resources is good.

Market Demand for cement is expected to accelerate in the coming years. In order to meet the rising demand,

cement companies are expected to scale up production by 56 MT in the next 3 years Boost to low-cost housing and infrastructure; Smart Cities; India’s road programme and Housing for All,

are likely to revive the demand for cement in India Boost to FDI - Large number of foreign players have entered and have invested heavily in the Indian

market

Source – Invest India


Major Challenges Faced

High Excise Duty • Cement is one of the highest taxed commodities next only to luxury goods

and at present 4th highest revenue generator for the Government of India Logistics & Railway Constraints

• Reduction in the fuel price, and no reduction in rail freight, which is leading to diversion from rail to road

• Lack of Cover Sheds and Platforms• Delayed loading time for BCNHL in new sidings

Unavailability of Fly Ash• Erratic supplies despite investing heavily on O&M systems at power plants• Substantial increase in landed cost of fly-ash; Imposition of Excise Duty on Fly

Ash • High transportation cost of fly-ash

Compliance of New Emission Standards• The new emission norms introduced require huge CAPEX investments• Timeline for compliance and implementation

background paper – cement

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