Cement Capacity to Outpace Demand Through FY29, Raising Questions Over Future Prices
Chennai | September 30, 2026: India's cement industry is heading towards a prolonged supply-demand imbalance, with manufacturing capacity projected to reach 867 million tonnes by FY29 while consumption is expected to rise to 596 million tonnes. The growing gap could limit manufacturers' pricing power, even as demand from housing and infrastructure projects continues to expand.
According to Kotak Institutional Equities, capacity utilisation is expected to remain between 68% and 70% through FY29, as major cement companies continue to add production capacity faster than the market can absorb it.
Cement Capacity Expected to Reach 867 Million Tonnes
India's installed cement capacity is projected to increase from 654 million tonnes in FY25 to 702 million tonnes in FY26, before reaching approximately 867 million tonnes by FY29.
Cement manufacturers are expected to add 42 million tonnes of capacity in FY27, followed by 67 million tonnes in FY28 and another 56 million tonnes in FY29.
The expansion reflects companies' efforts to prepare for long-term demand from infrastructure, housing and other construction activities. However, the pace of capacity additions is expected to remain ahead of consumption growth over the coming years.
Demand to Grow, but Not Fast Enough to Absorb New Supply
Cement consumption is projected to increase from 486 million tonnes in FY26 to 596 million tonnes by FY29.
After estimated growth of 8.7% in FY26, annual consumption growth is expected to moderate to around 7.1% during FY27-FY29.
The demand outlook remains positive, but the projected growth may not be sufficient to absorb the additional capacity coming online. Kotak Institutional Equities does not expect a meaningful improvement in the industry's supply-demand balance over the next few years.
Capacity Utilisation May Remain Below 70%
Despite rising cement consumption, the industry's capacity utilisation rate is expected to remain within a narrow range of 68%-70% through FY29.
This reflects the pace at which new manufacturing facilities are expected to become operational. When production capacity grows faster than demand, companies may find it difficult to operate plants at higher utilisation levels.
For cement manufacturers, lower utilisation can affect operating efficiency and profitability, particularly in an industry that requires significant investment in plants and equipment.
Major Cement Companies Continue Expansion Plans
India's leading cement manufacturers are continuing to expand their production capacity.
UltraTech Cement's share of domestic capacity increased from 21% in FY21 to 27% in FY26, although it eased slightly from 28% in FY25. The company is expected to take its domestic manufacturing capacity beyond 240 million tonnes by FY28.
Ambuja Cements has increased its capacity share from 12% to 15% and plans to raise its consolidated capacity from around 110 million tonnes to 119 million tonnes by the end of FY27.
Other companies are also pursuing expansion:
- Shree Cement aims to reach 80 million tonnes of domestic capacity over the medium term, compared with around 69 million tonnes in June.
- Dalmia Bharat is targeting 67 million tonnes by FY28.
- JK Cement plans to increase capacity from approximately 32 million tonnes to 50 million tonnes by FY30.
These expansion plans are expected to add further supply to the market over the coming years.
What the Supply-Demand Gap Means for Cement Prices
With capacity expected to grow faster than consumption, cement manufacturers may face limits on their ability to increase prices.
A persistent supply surplus can intensify competition among producers, particularly in markets where several companies are expanding simultaneously. This could make it harder for manufacturers to pass on higher production costs to customers.
However, actual prices will also depend on regional demand, transportation costs, input prices and the pace of infrastructure and housing activity. The projected national imbalance does not necessarily mean cement prices will move uniformly across all markets.
What It Means for Homebuyers and Real Estate Developers
Cement is a major construction material, so changes in its prices can affect project budgets for developers and construction costs for individual homebuilders.
If supply pressure limits cement price increases, developers may find it easier to manage one component of their construction expenses. However, this does not guarantee lower property prices, as land costs, labour, financing and other expenses also influence housing prices.
For homebuyers, the outlook provides useful context on construction costs, but the impact on property prices will vary by project and location. Developers and buyers undertaking construction should continue to account for possible changes in cement prices and other building-material costs.
What to Watch Through FY29
The industry's outlook will depend on whether cement demand accelerates enough to absorb the capacity being added. Infrastructure spending, housing construction and the commissioning schedule of new plants will be important factors.
For now, the projections point to sustained capacity expansion alongside steady demand growth, with utilisation expected to remain below 70%. The balance between new supply and actual consumption will be a key factor shaping cement prices and manufacturers' operating performance through FY29.
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