As India readies itself for the Union Budget FY2027, few sectors are watching the fine print as closely as cement. Often treated as a bellwether for economic momentum, cement sits at the intersection of infrastructure ambition, housing demand and public spending priorities. This year, expectations are quietly optimistic.
The government’s sustained push on infrastructure, affordable housing and rural development is likely to remain intact in the coming Budget. Roads, railways, metro networks and urban infrastructure projects have become familiar pillars of public expenditure, and their continuation signals steady demand for core building materials. Cement manufacturers, still adjusting to post-pandemic cost cycles and consolidation, are hoping for policy consistency rather than dramatic surprises.
Industry data suggests why this matters. Rural housing and infrastructure together account for nearly half of India’s cement consumption. Any budgetary emphasis on village roads, irrigation, low-cost housing or public works has a direct and immediate impact on volumes. In recent years, schemes linked to housing for all and expanded transport networks have provided a cushion even when private real estate slowed.
ICRA expects this trend to continue. “The likely sustained focus on infrastructure development, rural economy, and affordable housing in the upcoming Union Budget FY2027 is expected to augur well for the cement sector,” says Maitri Vira, Assistant Vice President and Sector Head at ICRA Ltd. She adds that ICRA projects cement demand growth of 6–7 percent in FY2027, driven largely by public spending and rural consumption.
That projection comes at a time when capacity additions announced over the past two years are beginning to come on stream. For cement companies, volume growth is essential to absorb new capacity and protect margins, especially after a period marked by volatile fuel costs and price competition. Government-led demand offers visibility that private sector cycles often cannot.
Infrastructure spending, however, is not just about highways and metros. Urban infrastructure such as sewage systems, water supply networks and redevelopment projects are increasingly gaining budgetary attention. These projects may be less visible but are cement-intensive and spread across longer timelines, offering steadier offtake.
Another factor the industry is watching closely is GST rationalisation. While discussions around tax restructuring continue, the full impact on cement prices and demand remains uncertain. “While the full impact of GST rate rationalisation remains to be seen, sustained infrastructure spending and policy stability are expected to provide earnings visibility for cement companies,” Vira notes. For manufacturers, predictability often matters more than marginal tax adjustments.
Rural demand, too, is expected to play a quiet but crucial role. A normal monsoon, stable agricultural incomes and continued allocation towards rural housing could support consumption beyond urban centres. Given that rural and infrastructure segments together account for 50–55 percent of cement usage, even incremental improvements can move the needle.
