Indian cement sector is sitting on upwards of Rs 60,000 crore of "sunk investment in surplus capacities", but expects big infrastructure projects like high speed rail corridors, bullet train and their cascading effect to spur demand, says industry body CMA.
According to the Cement Manufacturers Association (CMA), the industry has 100 mt (million tonnes) of excess capacity and so, it is in a comfortable position to supply additional demand of 3-5 mt every year coming from the big projects.
"Though the infrastructure projects are critical part of cement consumption and value chain but per se, the direct cement consumption in infrastructure projects is not so high. It only contributes 20 per cent or so to the total demand for cement," CMA President Shailendra Chouksey told PTI.
He was fielding a query on how cement demand would change in the wake of the government's focus on big infrastructure projects such as the Mumbai-Ahmedabad bullet train.
There are many other development activities that get linked to a big infrastructure project like high-speed rail corridor or the bullet train. This would lead to a lot of other activities like industrial development, trading and job creation, he added.
"The real cement demand will come when these activities shall start taking place along with the corridors, which is going to be a long-term but sustainable impact of such projects," Chouksey said.
Asked if the industry is prepared to meet rising demand in the long term, he said: "The industry is already sitting on more than Rs 60,000 crore of sunk investment in surplus capacities."
Chouksey further said: "Projects such as these would add to about 3-5 mt of additional cement demand every year. Hence, there is sufficient capacity to meet the demand for not only this project, but even for 10 projects like this on sustainable basis."
For every kilometre to elevated or underground tunnel track, nearly about 10,000 mt of cement would be consumed, which would translate into about 6 mt of cement demand in the next 5 years, he said.
In terms of employment creation and cement demand, he said "for every 1 million new jobs being created, the cement demand would be in the range of 20-40 mt going into housing and urban infrastructure development".
Housing will continue to remain the mainstay for cement demand for quite some time to come, Chouksey said.
Globally, the Indian cement market is the second-largest with a capacity of 425 mtpa after China, which has around 2,400 mtpa.