Infrastructure boost under new government and consequent growth in cement demand is likely to reduce demand-supply mismatch in the cement industry. The Indian cement industry is confronting excess capacity problem since last many decades resulting in lower capacity utilization of cement plants.

Country's present cement capacity is around 375 million tonnes; while demand is around 300 million tonnes. However, this gap between supply and demand is likely to shrink as focus on revival of stalled infrastructure projects results in higher demand growth over next few years.
 
Higher spend on public infrastructure is likely to result in rise in share of infrastructure sector; while share of residential sector is expected to decline, according to report by CII and AT Kearney titled 'Cement Vision 2025: Scaling New Heights', while residential and commercial construction will continue to spur cement demand, the industry's real boost is expected to come from an increase in the pace of infrastructure creation over the next 10 years. As per CII report mentioned above, an infrastructure investment of between 9-12% of GDP will be required to enable sustained economic growth in India.
 
"The present Government is focused on nation-wide infrastructure growth and various housing projects in urban and rural areas, amongst other initiatives. The Indian Government's measures to promote investment in ports, roads, airports and other infrastructure projects are also likely to support cement demand. The industry is also likely to get boost from demand for smart cities project," said Alok Sanghi, director, Sanghi Industries.
 
Sanghi added that the cement companies are likely to benefit from the proposed increase in long term funding availability for infrastructure projects which is likely to facilitate more investment in these sectors. "Only through infrastructure spending, India can raise its per capita consumption, which is far lower at around 190 kg compared to over 350 kg in Brazil and 1500 kg in China," Sanghi said.