India’s cement industry is expected to face a persistent gap between capacity and demand through FY29, with new capacity additions likely to keep utilisation levels below 70%, according to an analysis by Kotak Institutional Equities.
The industry’s installed cement capacity is projected to increase from around 654 million tonnes per year (mtpa) in FY25 to 702 mtpa in FY26 and nearly 867 mtpa by FY29. While cement demand is expected to remain healthy, growth is likely to be slower than the pace of capacity expansion.
Cement consumption is projected to rise from about 486 million tonnes in FY26 to 596 million tonnes by FY29. Consumption growth is estimated at 8.7% in FY26 and around 7.1% annually between FY27 and FY29. Cement production is also expected to increase, rising from about 490 million tonnes in FY26 to nearly 601 million tonnes by FY29.
Despite the expected growth in demand, capacity utilisation is projected to remain in the 68%-70% range through FY29. Kotak Institutional Equities expects the supply-demand balance to remain largely unchanged over the next few years as manufacturers continue to add capacity.
Cement production has already recorded year-on-year growth for 13 consecutive months through August 2026, according to the latest Reserve Bank of India Bulletin. Production growth was also in double digits in August, reflecting continued activity in the sector.
Major cement companies are preparing for higher demand by expanding their manufacturing capacity. UltraTech Cement has increased its share of domestic cement capacity from 21% in FY21 to 27% in FY26, although this was slightly lower than its 28% share in FY25. The company’s domestic capacity is expected to exceed 240 mtpa by FY28.
Ambuja Cements has also expanded its position, with its share of domestic capacity rising from 12% in FY21 to 15% in FY26. Its consolidated capacity is expected to reach around 119 mtpa by the end of the financial year, compared with about 110 mtpa earlier.
Shree Cement’s share of domestic capacity has increased from 8% in FY21 to 10% in FY26. The company is targeting domestic capacity of around 80 mtpa, compared with approximately 69 mtpa as of June. Dalmia Bharat is targeting capacity of about 67 mtpa by FY28, while JK Cement plans to increase its capacity to around 50 mtpa by FY30 from nearly 32 mtpa currently.
The industry is expected to add about 42 mtpa of capacity in FY27, 67 mtpa in FY28 and another 56 mtpa in FY29. These additions are expected to keep the supply side ahead of demand despite continued growth in construction and infrastructure activity.
The combination of rising production and substantial new capacity could also limit pricing power for cement manufacturers. With supply expected to remain ahead of demand, companies may face constraints in raising prices significantly over the medium term.
Overall, the cement sector is entering a period of continued capacity expansion, while demand is expected to grow at a comparatively measured pace. The resulting capacity overhang is likely to remain a key feature of the industry through FY29.
