India’s cement demand is projected to expand at a compound annual growth rate (CAGR) of 7–8 per cent over the medium term, driven by rural and urban housing, infrastructure, and commercial construction projects, according to a report by UBS. This growth rate is estimated at 1.0–1.2 times the pace of real GDP expansion.
The report highlighted that capacity additions in the cement sector are set to pick up across regions starting from the last quarter of FY25.
Regionally, the eastern market witnessed a sharp fall in demand due to early rains, though prices held steady at Rs 353 per bag. In contrast, southern markets saw a price rise of Rs 10 per bag despite the monsoon slowdown.
While cement prices are expected to decline sharply in FY25, UBS anticipates recovery in FY26 and FY27, supported by sectoral consolidation and margin tailwinds. “We expect volumes to grow at 1.0–1.2x real GDP growth over the medium term. Costs are expected to trend lower over the next two to three years, supporting margins,” the report noted.
However, strong capacity additions in FY26–27 could limit the scale of price hikes despite the rebound. “We remain positive on long-term margins and return ratios, given the consolidation trend in the sector,” UBS added.
In August, cement prices stayed flat month-on-month but remained higher year-on-year. Seasonal factors, particularly the monsoon, slowed construction in rural areas and infrastructure projects, weakening demand and restricting price increases.
Data from the Ministry of Commerce & Industry released on August 20 showed cement production rose 11.7 per cent in July 2025 compared to the same period last year, with cumulative growth at 8.9 per cent between April and July of FY26.