India’s 550Mta cement sector had hardly emerged from the impact of the first wave of COVID-19 when a second, more devastating wave dented future growth prospects. Initial estimates have projected a double-digit advance in cement demand for FY21-22, but this level of growth should be viewed against a low comparison base. As the underlying demand scenario remains weak, the outlook for the country’s cement sector appears uncertain from a near-to mid-term perspective.

Operating at less than 55 per cent of capacity utilisation with subdued demand, India’s expectations of a double-digit growth trajectory continue to be a far cry from reality. With GDP contracting by 7.3 per cent during the FY20-21, near- to medium-term cement sector growth remains uncertain.

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Economists and analysts are estimating India’s GDP to grow by 11-12 per cent in 2021-22, which should have a positive impact on cement companies. However, it is worth noting that growth will be from a very low base. Moreover, expectations of a third wave of COVID-19 to hit India by September-October may derail any projections further. Therefore, realistic growth in demand may only be ascertained during 2022-24. However, any estimations of double-digit, or even higher single-digit growth, thereafter still look like a stretch too far given the current economic situation and the impact of the pandemic aftermath.