The CementIndustry’s blueprint for future growth is dependent on Demand, Delivery, andCustomer-Centric Innovation, writes Dr SB Hegde.
As India aimsfor a US$ 5.00-trillion economy, cement remains the cornerstone of growth,backed by strong policies and sustainable advancements.
- Dr S B Hegde,
Professor, Department of Civil Engineering,
Jain College of Engineering and Technology,Hubli, and
Visiting Professor, Pennsylvania State University, USA
The UnionBudget 2025-26 paves the way for the cement industry’s transformation throughinfrastructure growth, sustainability initiatives, and digital advancements. Keymeasures include incentives for alternative fuels, energy-efficienttechnologies, and green cement adoption, reducing environmental impact whileenhancing cost efficiency.
The budget alsoprioritizes logistics optimization, AI-driven marketing, and workforce skilldevelopment, ensuring operational excellence and market competitiveness. Withincreased government spending on smart cities, transportation, and renewableenergy, cement demand is set to rise. A customer-centric and innovation-drivenapproach will position the industry as a key enabler of India’s long-termeconomic and infrastructure goals.
Cement is thefoundation of India’s infrastructure and economic growth, essential forhighways, bridges, housing, and industrial projects. As the second-largestproducer and consumer of cement globally, India plays a key role in the market.
In 2024,India’s cement capacity stood at 600 MTPA, with domestic consumption at 440MTPA (73 per cent utilization). This gap signals growth potential, especiallywith the government’s infrastructure and housing push.
The UnionBudget 2025-26 has reinforced cement’s role with a record INR 12.5-lakh-crorefor infrastructure, a 17 per cent rise from last year, covering highways,railways, ports, and airports under Gati Shakti. Affordable housing gets INR 85,000-croreunder PMAY, targeting 2.0 crore homes by 2026. Urban infrastructure, with INR 50,000crore under Smart Cities and AMRUT, will further boost demand.
Renewableenergy and industrial growth also see INR 40,000 crore for energy projects and INR20,000-crore for industrial corridors and warehousing, creating demand forspecialized cement. Rural roads, backed by INR 1.80-lakh-crore, will drivecement consumption in villages.
Withsustainability in focus, the industry is innovating in blended cements,alternative raw materials, and low-carbon technologies to balance demand withenvironmental responsibility. As India aims for a US$ 5.00-trillion economy,cement remains the cornerstone of growth, backed by strong policies andsustainable advancements.
Cement Demand
The UnionBudget 2025-26 has reinforced cement’s crucial role in infrastructure, housing,and industrial development, driving a surge in demand.
Infrastructure Push and Cement Demand:
With INR 12.5-lakh-croreallocated for capital expenditure, infrastructure projects are set to expandsignificantly. The Gati Shakti National Master Plan aims to build 25,000 km ofhighways, modernize rail corridors, and enhance port connectivity, directlyboosting cement consumption. Urban renewal programs like Smart Cities andAMRUT, backed by INR 50,000-crore, will further increase demand throughsanitation, transport, and water supply upgrades.
Affordable Housing and Urban Development:
Thegovernment’s INR 85,000-crore allocation to PMAY, with a target of 2.0 crorehouses by 2026, will drive cement demand, particularly in Tier 2 and Tier 3cities. Rental housing and urban redevelopment will further contribute togrowth. Sustainable construction materials like blended cements (PPC and PSC)will play a key role in meeting demand while aligning with environmental goals.
Renewable Energy and Industrial Development:
An INR 40,000-croreinvestment in solar and wind energy infrastructure will drive cementconsumption for durable foundations and storage facilities. Additionally, INR 20,000-croreallocated for industrial corridors and warehousing will accelerate constructionof factories and logistics hubs, increasing demand for specialized cementproducts.
Overall, thebudget’s focus on large-scale infrastructure, housing, and industrial growthwill propel cement demand, reinforcing its role in India's economic expansion.
Revolutionizing Cement Logistics
The UnionBudget 2025-26 has reinforced logistics as a key driver of efficiency and costreduction in the cement industry. With transportation accounting for nearly30-35 per cent of cement’s total cost, optimizing logistics through multimodaltransport, sustainability initiatives, and infrastructure upgrades is crucialfor improving profitability and reducing environmental impact.
Multimodal Transport and Supply ChainOptimization:
The NationalLogistics Policy (NLP) and Budget incentives are pushing for seamlessintegration of rail, road, and waterways, reducing dependency on costly roadtransport. With INR 2.6-lakh-crore allocated for railways, the expansion ofdedicated freight corridors will enable faster and more cost-effective cementmovement. The Sagarmala project, with a renewed investment of INR 1.00-lakh-crore,will enhance coastal shipping, reducing logistics costs by up to 20 per centfor cement manufacturers located near ports.
Sustainable Cement Logistics:
The Budgetpromotes green logistics by subsidizing electric and LNG-powered trucks,reducing reliance on diesel. With INR 10,000-crore allocated for clean energyvehicles, cement companies are expected to adopt CNG, LNG, and electric trucks,lowering carbon emissions and fuel costs. Indian Railways’ plan to achievenet-zero emissions by 2030 will further encourage cement transportation viaelectrified freight corridors, cutting costs and environmental impact.
Tackling Infrastructure Bottlenecks:
Investment inrail and port infrastructure will ease transportation bottlenecks and lowerlogistics costs. The Budget’s INR 1.20-lakh-crore for port modernization andexpansion of private freight terminals will ensure smoother cement movement. ThePM Gati Shakti initiative aims to eliminate bottlenecks in road transport byimproving connectivity to manufacturing hubs, ensuring timely and cost-effectivecement deliveries.
With thesebudget-driven advancements, the cement industry is set to achieve lowerlogistics costs, faster deliveries, and a more sustainable supply chain,strengthening its competitive edge.
Marketing and Branding in a CommoditizedIndustry
The cementindustry must move beyond price competition by embracing value-driven marketingand digital transformation. The Union Budget 2025-26 supports digital expansionand sustainability, creating new branding opportunities.
Shifting to Sustainability-Driven Marketing:
With INR 5,000-croreallocated for R&D in low-carbon materials, companies can differentiatethrough sustainability. Green cement products like LC3 and geopolymer cementhelp brands align with India’s net-zero targets and attract eco-consciousbuyers.
Digital Transformation in Cement Sales:
The INR 1.50-lakh-croredigital investment fuels e-commerce, AI-driven engagement, and B2B digitaltransactions. Platforms like Infra.Market and IndiaMart enhance brandvisibility, while AI-powered demand forecasting optimizes supply chains. D2Cmodels via apps and websites reduce reliance on traditional distributors.
Tapping into Premium Cement Demand:
With INR 12.50-lakh-croreallocated for infrastructure projects, demand is rising for high-strength, sulphate-resistant,and low-heat cements. By aligning with government-backed green initiatives,brands can secure high-margin contracts and long-term customer loyalty.
Cementcompanies must leverage sustainability, digitalization, and premiumization tostay competitive in an evolving market.
Customer-Centric Innovation
The cementindustry is shifting to a customer-centric model, ensuring contractors,builders, and homebuyers get better service, support, and education. The UnionBudget 2025-26, with its focus on digital transformation and skill development,is driving innovations to enhance customer experience and loyalty.
Enhancing Customer Experience with Technology:
AI, IoT, andblockchain are revolutionizing supply chains, enabling real-time tracking viaGPS and RFID for timely deliveries and fewer disruptions. AI-driven demandforecasting ensures uninterrupted supply. The INR 1.50-lakh-crore investment in5G is improving smart logistics and last-mile connectivity.
Educating Stakeholders on Cement Quality andSustainability:
Proper cementusage is key to durability. The INR 4,000-crore skill development fund supportstraining for masons and contractors. Companies use digital platforms, chatbots,and mobile apps for on-demand technical guidance, while government-backed greencertification programs promote sustainable construction.
After-Sales Service and Technical Support:
Manufacturersnow offer technical support teams to help select the right cement grade,reducing failures. AI-driven digital complaint systems resolve quality issuesquickly. Loyalty programs reward retailers and contractors for repeat purchasesand quality compliance.
Withtechnology-driven engagement, knowledge-sharing, and enhanced services, thecement industry is becoming a trusted partner in India's infrastructure growth,ensuring a seamless user experience.
Cement Industry and Circular Economy
The cementindustry is driving the circular economy by transforming waste into valuableresources. The Union Budget 2025-26 promotes alternative fuels, industrialby-products, and low-carbon cement technologies, enhancing sustainability andcost efficiency.
Budget Incentives for Alternative Fuels andRaw Materials (AFR):
To cut fossilfuel dependency, the government offers tax incentives and subsidies for AFR usein cement kilns. The INR 3,500-crore allocation for waste-to-energy projectsencourages municipal solid waste, biomass, and RDF as fuel alternatives. WHRSadoption is also incentivized, with 40 per cent of top cement plants alreadyusing WHRS, a figure set to rise.
Boosting Green Cement Adoption:
Low-carboncements like PPC, PSC, and LC3 gain momentum with tax rebates and carboncredits under the INR 5,000-crore green transition fund. Large projects mustnow include blended or green cement, while the 2025 carbon trading frameworkwill let companies monetize carbon savings.
With policybacking and financial incentives, the cement industry is leading India’scircular economy transition, ensuring sustainability and profitability.
Challenges and Solutions
Despite stronggrowth potential, the cement industry faces rising input costs and skill gaps. TheUnion Budget 2025-26 introduces measures to enhance cost efficiency andworkforce development for long-term sustainability.
Addressing Cost Pressures Amid Rising InputPrices:
Coal pricesrose 15 per cent in 2024 due to global disruptions, increasing manufacturingcosts. To offset expenses, the government has allocated INR 7,500-crore forrenewable energy adoption, helping plants shift to solar, wind, and WHRS forlower electricity costs. A 10 per cent tax rebate on energy-efficienttechnologies encourages modernization.
Usingalternative fuels and raw materials (AFR) and optimizing logistics under theNational Logistics Policy (NLP) can further reduce costs and boostprofitability.
Bridging Skill Gaps in Cement Logistics andMarketing:
With digitalsupply chains and green cement technologies expanding, skilled workers are inhigh demand. The INR 6,000-crore Skill India Mission funds training inlogistics, digital marketing, and sustainable construction. The NationalApprenticeship Promotion Scheme (NAPS) supports upskilling in AI-driven supplychain management, data analytics, and sustainable cement production.
With cost-savingstrategies and workforce development, the cement industry is well-equipped forfuture growth and innovation.
Conclusion
The UnionBudget 2025-26 drives infrastructure expansion, sustainability, and digitaltransformation, reinforcing cement’s role in national growth. As India advancesin highways, railways, and smart cities, cement demand will rise. To meet thisdemand, the industry must optimize logistics, adopt green cement technologies,use alternative fuels, and leverage AI-driven marketing.
The Union Budgetincentives for energy efficiency, skill development, and digitalization enhancecompetitiveness while reducing environmental impact. Collaboration betweengovernment, cement manufacturers, and logistics providers is key. Asustainability-focused, customer-centric approach will boost profitability andposition the industry as a pillar of India’s infrastructure and economicfuture.
About the author:
Dr S B Hegde, a global cement industryveteran with over three decades of experience, has held top roles, including thatof President – Manufacturing at a reputed Indian cement company. Currently, heis a Professor, Department of Civil Engineering, Director of PostgraduateStudies at Jain College of Engineering and Technology, Hubli, and a VisitingProfessor at Pennsylvania State University, USA.
He advises the Indian Government on hydrogenapplications in cement manufacturing and consults for leading cement companies.Dr Hegde also serves on expert panels and editorial boards for prominentindustry publications.
References
Union Budget2025-26, Ministry of Finance, Government of India.
NationalInfrastructure Pipeline (NIP) Report, NITI Aayog, Government of India.
NationalLogistics Policy (NLP) 2022, Ministry of Commerce and Industry, Government ofIndia.
Skill IndiaMission, Ministry of Skill Development and Entrepreneurship, Government ofIndia.
Growth of theIndian Cement Industry, Indian Cement Review, 2024.
Cement IndustryReport 2024, Indian Brand Equity Foundation (IBEF).
Advancements inGreen Cement Technologies, The Concrete Society, United Kingdom.
DigitalTransformation in the Cement Industry, McKinsey & Company, 2024.
Impact ofAlternative Fuels on Cement Manufacturing, International Cement Review, 2024.