Increased spending by the government in the affordable housing sector is expected to boost growth in the cement sector starting FY20, a report said. The Modi government has come up with several measures in the budget to propel the sluggish realty sector including increase in spending in rural and urban affordable segment, CARE Ratings said in a report. The roads, urban infrastructure and commercial realty would also be the major demand drivers for the cement industry, it added. The southern and eastern segments would continue to be major regional demand drivers followed by the western region among the major regions.The cement production is expected to remain steady with total output likely to grow by 5-7 per cent during FY20. The cement prices may gain their strength from the demand in the retail segment, the report noted.
Meanwhile, the housing and infrastructure sectors are undergoing slowdown at present. According to the Department of Industrial Policy and Promotion (DIPP) annual report released last week, the capacity utilisation of cement industry in India is low, and 170 MT out of 510 MT is completely idle. Housing and realty sectors are the leading consumers of cement in India. The infrastructure and industrial development sectors follow the two.
The stability of construction sector was disturbed by the implementation of RERA, leading to the realty developers keeping away from launching new projects in the first half of the previous fiscal years, according to a report on cement industry by CARE Ratings released last year.
“Cement industry is a logistic-intensive sector and the inefficient logistics has also contributed to the idle capacity of the plants,” Ashish Nainan, Research Analyst, CARE Ratings had earlier told Financial Express Online.
