Indian cement industry to add grinding capacity of 160-170 MT by FY28: Crisil
Rating agency Crisil in its latest report has said that the Indian cement industry is going to add a grinding capacity of 160-170 million tonnes (MT) between FY26 and FY28 and invest around Rs 1.2 lakh crore in capex. The report said compared to this capacity addition, it is almost 75 per cent up from the corresponding three previous fiscals, when the industry had added 95 MT. This growth in capacity addition is primarily fuelled by healthy demand outlook and high capacity utilisation.
The report said while this growth will entail substantial capital expenditure (capex), the risks associated will be lower because a sizeable proportion is brownfield and the majority of the expansion will be funded from healthy operating cashflows. It said consequently, the financial leverage of cement makers, as measured by the net debt to EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio, will remain steady, keeping credit profiles stable. Crisil's analysis is based on the performance of 17 cement makers, which account for 85 per cent of the 668 MT installed capacity as on March 31, 2025.
According to the report, the Indian cement industry is witnessing consolidation, with the top five producers snapping up smaller players, alongside their brownfield expansions. In the past three fiscals, cement saw robust demand, with volume clocking a compound annual growth rate (CAGR) of 9.5 per cent driven by key segments such as infrastructure and housing. As a result, capacity utilisation increased to 70 per cent last fiscal, compared with a decadal average of 65 per cent.
It further said 65 per cent of the capacity addition will be undertaken via brownfield projects, which require a shorter construction period with a limited land acquisition, resulting in lower capital cost and fewer implementation challenges. Cement makers are estimated to incur capex of Rs 1.2 lakh crore between fiscal 2026 and 2028 - around 50 per cent higher compared with the previous three fiscals -predominantly to fund the capacity additions. Moreover, the projected capex also includes 10-15 per cent outlay towards investments in green energy and cost efficiency improvement projects, which would support profitability.
