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India Ratings and Research (Ind-Ra) in its latest report has said that GST rationalisation is likely to bring down the prices of cement by Rs 30-35 per 50 kg bag and lower the cost of construction. This came on back drop of GST Council’s decision to overhaul the current GST regime into a two-slab structure - 5% and 18%. Therefore, cement will attract 18% tax instead of 28%. Ind-Ra has said that the revamp is a ‘structural positive’ for the cement sector and could support demand in the affordable segment, which has been tepid in recent times. It expects companies to largely pass on this benefit by reducing selling prices which will help lower construction costs for infrastructure and housing projects. It noted that the price reduction for consumers could also lead to some upgrading to higher-value brands, benefiting tier 1 players.

However, it has maintained its cement demand growth forecast at 5-7% year-on-year (YoY) as the demand pick-up across segments may not be immediate. It added that the Indian cement demand is likely to slow down to single-digit growth in the seasonally weak second quarter of FY26 as monsoon dampens construction activity. Meanwhile, it noted that the cement industry started this fiscal with a 6% to 7% growth in the June quarter, after having a slow growth in FY25, driven by a healthy recovery in rural demand, supported by real wage growth and increased infrastructure spending. Further, in the second quarter of FY26, the industry had a good start with 12% YoY volume growth in July 2025.

Moreover, rural demand is expected to stay healthy, aided by an above-average monsoon and a fourth consecutive quarter of positive real wages growth, in contrast, it said urban demand is lagging due to decline in new launches in Q1FY26. However, it expects rate cuts to bolster urban demand in second half of the fiscal. Over the capacity utilisation of cement player, Ind-Ra said the cement industry witnessed significant capacity additions in Q1FY26, with around 17 million tonne commissioned out of the 75 MT planned for the full year.