A contracted comparison base has helped push the Indian cement sector to a double-digit growth trajectory in 2021. However, there are a number of one-time factors that should be taken into account and further challenges could lie ahead. A more modest demand picture is expected to emerge in the coming years.

A cut in India’s GDP growth forecast for the current fiscal (FY21-22) to 9.5 per cent against an earlier projection of 12.5 per cent by the International Monetary Fund (IMF) will have its ramifications on the country’s 550Mta cement industry. A severe and more deadly outbreak of a second wave of COVID-19 during the April-June 2021 period made India’s central bank cautious about the country’s growth trajectory, which witnessed a GDP contraction of 7.3 per cent in 2020-21.

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India’s cement sector, which has been struggling for nearly a decade as demand has not achieved the expected trend line, registered a decline of nearly 15 per cent in 2020. In 2021 the sector is projected to see growth in the double-digit range. Although at first glance the growth numbers look promising, they should be viewed against a very low comparison base.