Why is cement demand in India not growing as expected?

Cement demand growth is significantly lower than anticipated due to a mismatch with India's GDP expansion, suggesting potential structural issues.

What is impacting cement sector profitability in India?

Profitability is under pressure because long-term cement prices have risen slower than inflation, despite healthy operational margins.

How long has the Indian cement industry waited for demand revival?

The cement sector has been expecting a demand revival for the past four years without seeing substantial growth.

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Cement Sector Growth Stalls: Demand Lagging Behind GDP

23 Dec, 2025

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Summary

Cement demand growth is significantly lower than expected based on GDP.
Long-term cement prices have risen slower than inflation.
Profitability in the sector remains under pressure despite healthy margins.

Cement Sector Growth Stalls: Demand Lagging Behind GDP

The cement industry in India is grappling with an unexpected demand slump, a situation that has persisted for the past four years. Traditionally, cement demand closely tracks India's GDP growth, suggesting a potential 10% volume increase given the current 6-7% GDP expansion. However, actual demand growth has been a mere 4-5%, raising concerns about underlying structural weaknesses in the market. This discrepancy points to a demand situation that may be more complex than initially assumed.

Despite reporting healthy operational margins, typically between 25-30%, the sector's overall profitability is facing considerable pressure. This is primarily attributed to the fact that cement prices have not escalated in line with overall inflation over the long term. This pricing dynamic erodes the real value of earnings, making sustained financial health a challenge for cement producers.