The largest cement producing state in India, Rajasthan, where no substantial capacity additions have occurred in the past five years, will soon be required to enhance production capacity in the state in view of the surge in demand. In the absence of that, the government and the state would lose substantially, according to a study by the PHD Chamber of Commerce and Industry.
"If there is no augmentation of capacity in the state, the increase in demand would have to be met by producers from outside the state. This may not be a major loss for manufacturers as most of them are multi-location producers, but the government and the state will lose substantially in terms of employment generation and revenues," the study said.
According to the study, the demand for cement in the state is expected to be 9.07Mt in 2006-07, compared to 6.61Mt in 2003-04. The cement demand of the entire northern region has also been projected to increase to 30.4Mt in 2006-07, from 22.8Mt in 2003-04.
Rajasthan, which accounts for 15.52 per cent of the total cement production in India, has witnessed a slowdown in production growth to 7.2 per cent per annum during the second half (1999-2004) of the last decade, compared to 17.3 per cent per annum during the first half (1994-99).
The production of cement in Rajasthan is driven mainly by local consumption demand, mostly from the north Indian market. Around 60 per cent of the cement demand comes from neighbouring states of Haryana, Delhi, Uttar Pradesh, Gujarat and Punjab.
With all these states emphasising the development of industrial estates, special economic zones and other infrastructure developments, this would generate a stable source of demand in the short and medium term, the study said.