The Indian cement industry is poised for a significant expansion phase, with plans to add 160–170 million tonnes (MT) of grinding capacity between FY26 and FY28, according to a report by CRISIL Ratings. The sector is expected to invest nearly ₹1.2 lakh crore in capital expenditure (capex) during this period — a sharp 75% increase compared to the 95 MT capacity added over the preceding three fiscal years.
This surge in capacity creation is being driven by a robust demand outlook and high capacity utilisation levels, CRISIL noted. “While this growth will entail substantial capital expenditure, the associated risks remain limited as a sizeable proportion of the expansion is brownfield, and the majority will be funded through healthy operating cashflows,” the agency said.
Thanks to this disciplined approach, the financial leverage of cement producers — measured by the net debt-to-EBITDA ratio — is expected to remain stable, ensuring steady credit profiles across the industry. CRISIL’s assessment is based on data from 17 leading cement manufacturers, representing about 85% of India’s total 668 MT installed capacity as of March 31, 2025.
The industry is also undergoing active consolidation, with major players acquiring smaller firms while simultaneously ramping up brownfield expansions. Over the past three years, cement demand grew at a compound annual growth rate (CAGR) of 9.5%, buoyed by strong performance in infrastructure and housing sectors. Consequently, capacity utilisation improved to 70% in FY25, up from a decadal average of 65%.
CRISIL highlighted that 65% of the upcoming capacity will stem from brownfield projects, which offer advantages such as shorter construction timelines, minimal land acquisition needs, and reduced implementation risks and costs.
Of the total planned ₹1.2 lakh crore capex, about 10–15% will be channelled towards green energy initiatives and cost-efficiency projects, further enhancing the industry’s profitability and sustainability.
With steady demand, disciplined capex, and a growing focus on sustainability, India’s cement sector appears set for a resilient and expansionary phase through FY28.
