Cement Sector Gains from Union Budget 2026-27
- Capex-Driven Demand: Public capital expenditure raised to ₹12.2 lakh crore, driving cement demand via large infrastructure projects like freight corridors, metros, and urban development.
- Tier-2 & Tier-3 City Focus: Creation of City Economic Regions (CERs) and investments in cities with 5 lakh+ population will accelerate housing, transport, and urban infrastructure growth.
- Logistics & Connectivity Boost: Initiatives like dedicated freight corridors, National Waterways, and high-speed rail corridors improve transport efficiency, reduce costs, and enhance sector competitiveness.
- Sustainability & CCUS Support: ₹20,000 crore CCUS outlay enables decarbonisation of cement production, aligning the sector with India’s Net Zero 2070 goals.
- Sectoral & Economic Impact: Cement clusters drive regional employment, supply chains, and inclusive growth, supported by stable macroeconomic conditions with a fiscal deficit of 4.3% of GDP.
The Union Budget 2026- 27 has, in a way, set a stage for cement sector to capitalize on robust demand driven mainly by governments ongoing infrastructure spending drive. With capex increased by almost 9% to 12.2 trillion and effective capex touching 17.1 trillion, cement demand is likely to continue registering mid, to, high single, digit growth for the near future. Infrastructure accounts for a sizeable share, that is almost one, fourth of cement consumption, and big, ticket projects such as dedicated freight corridors, high, speed rail networks, and urban infrastructure development in tier, 2 and tier, 3 cities will serve as a source of steady volume growth for producers.
Most think that if execution of projects continues timely, cement demand may grow at two digits over a medium term. Certainly, at the same time, recent structural changes are also giving a boost to cement consumption.
GST regime has lowered the overall tax burden on cement to 18%, thereby enhancing affordability and supporting demand even in a market like the southern India. Volumes, which have been recovering since December 2025, supported by a favourable base and recent price hikes holding firm, signal that manufacturers are gaining pricing power as demand becomes stronger. Besides, rural housing and infrastructure continue to be the major areas where cement consumption is concentrated, accounting for over half of total consumption.
The Cement Manufacturers’ Association (CMA) welcomed the Union Budget 2026-27 for reinforcing the ambitions for the Nation’s growth balancing the aspirations of the people through inclusivity inspired by the vision of Shri Narendra Modi ji, Hon’ble Prime Minister of India, for a Viksit Bharat by 2047 and Atmanirbharta.
The Budget underscores India’s steady economic trajectory over the past 12 years, marked by fiscal discipline, sustained growth and moderate inflation, and offers strong demand visibility for infrastructure linked sectors such as Cement.
The Budget’s strong infrastructure push, with public capital expenditure rising from ₹11.2 lakh crore in fiscal year 2025–26 to ₹12.2 lakh crore in fiscal year 2026–27, recognises infrastructure as the primary anchor for economic growth creating positive prospects for the Indian Cement Industry and improving long term visibility for the Cement sector. The emphasis on Tier 2 and Tier 3 cities with populations above 5 lakh and the creation of City Economic Regions (CERs) with an allocation of ₹5,000 crore per CER over five years, should accelerate construction activity across housing, transport and urban services, supporting broad based Cement consumption.
Logistics and connectivity measures announced in the Budget are particularly significant for the Cement Industry. The announcement of new dedicated freight corridors, the operationalisation of 20 additional National Waterways over the next five years, the launch of the Coastal Cargo Promotion Scheme to raise the modal share of waterways and coastal shipping from 6% to 12% by 2047, and the development of ship repair ecosystems should enhance multimodal freight efficiency, reduce logistics costs and improve the Sector’s carbon footprint. The announcement of seven high speed rail corridors as growth corridors can be expected to further stimulate regional development and construction demand.
Commenting on the Budget, Mr Parth Jindal, President, Cement Manufacturers’ Association (CMA), said, “As India advances towards a Viksit Bharat, the three kartavya articulated in the Union Budget provide a clear context for the Nation’s growth and aspirations, combining economic momentum with capacity building and inclusive progress. The Cement Manufacturers’ Association (CMA) appreciates the Union Budget 2026-27 for the continued emphasis on manufacturing competitiveness, urban development and infrastructure modernisation, supported by over 350 reforms spanning GST simplification, labour codes, quality control rationalisation and coordinated deregulation with States. These reforms, alongside the Budget’s focus on Youth Power and domestic manufacturing capacity under Atmanirbharta, stand to strengthen the investment environment for capital intensive sectors such as Cement. The Union Budget 2026-27 reflects the Government’s focus on infrastructure led development emerging as a structural pillar of India’s growth strategy.
The ₹20,000 crore CCUS outlay for various sectors, including Cement, fundamentally alters the decarbonisation landscape for India’s emissions intensive industries. CCUS is a significant enabler for large scale decarbonisation of industries such as Cement and this intervention directly addresses the technology and cost requirements of the Cement sector in context. The Cement Industry, fully aligned with the Government of India’s Net Zero commitment by 2070, views this support as critical to enabling the adoption and scale up of CCUS technologies while continuing to meet the Country’s long term infrastructure needs.”
Dr Raghavpat Singhania, Vice President, CMA, said, “The Government’s sustained infrastructure push supports employment, regional development and stronger local supply chains. Cement manufacturing clusters act as economic anchors across regions, generating livelihoods in construction, logistics and allied sectors. The Budget’s focus on inclusive growth, execution and system level enablers creates a supportive environment for responsible and efficient expansion offering opportunities for economic growth and lending momentum to the Cement sector. The increase in public capex to ₹12.2 lakh crore, the focus on Tier 2 and Tier 3 cities, and the creation of City Economic Regions stand to strengthen the growth of the Cement sector. We welcome the Budget’s emphasis on tourism, cultural and social infrastructure, which should broaden construction activity across regions. Investments in tourism facilities, heritage and Buddhist circuits, regional connectivity in Purvodaya and North Eastern States, and the strengthening of emergency and trauma care infrastructure in district hospitals reinforce the Cement sector’s role in enabling inclusive growth."
CMA notes positively the Government’s continued commitment to fiscal discipline, with the fiscal deficit estimated at 4.3% of GDP for fiscal year 2026-27, reinforcing macroeconomic stability and investor confidence. As India progresses towards Viksit Bharat 2047, the Cement Industry reaffirms its commitment to working closely with the Government to build resilient, sustainable and inclusive infrastructure that supports long term national development.
