Cement Demand Awaiting Infra Push

Cement Demand Awaiting Infra Push

In fullness of time, India will grow to become a $20 trillion economy, and three things that need to be done right for this to happen, i.e., Manufacturing, Services and Agriculture - thus spoke our Prime Minister recently, while in the US. We agree and we hasten to add that none of these three are going to get a move on without a veritable revolution in our infrastructure. Some of us may associate infrastructure as an enabler for competitive manufacturing only, however in reality, services as well as agriculture also depend heavily on the right kind of infrastructure support - but more of that later. The important takeaway is that infrastructure HAS to improve.

In all countries of the world, the fortunes of the cement industry have been inexorably linked with infrastructure projects. An interesting information is that the share of national cement consumption in infrastructure vis-àvis housing, etc. depends a lot on the stage of development of an economy. When China´s per capita cement consumption peaked at 1,000 kg, it was at the crest of its infrastructure frenzy. Given that striking example, and given that India´s per capita consumption is now only at a paltry 190 kg, and with just about 25 per cent of that going towards infrastructure, the Indian cement players harbour justifiably high hopes that our infrastructure campaign will significantly push cement demand.

Other than a few sub-sectors of infrastructure such as Communications, most "hard" infrastructure assets are construction-intensive. And construction means consumption of building materials, of which steel and cement are the unquestionable leaders. In particular, assets like ports, concrete roads, railways/bridges, airports, power stations (and specially, hydropower units on dams) are huge guzzlers of concrete - and cement.

Therefore, it is only to be expected that the cement industry will eagerly look forward to the nation going on an infrastructure construction overdrive. From a per capita cement consumption of 200 kg to even 500 kg (leave alone the 1,000 kg of China) represents a huge headroom, a momentous opportunity for the industry, and my guess is that bulk of this additional consumption will be driven by infrastructure, in the coming 10 years.

I take up one example of potential consumption of cement - and intentionally, one that facilitates agriculture, just to drive home the point, that quite like Manufacturing and Services sectors depend on quality of infrastructure, for their competitiveness, our Agriculture also will make a difference, in terms of productivity and competitiveness, if supported by proper facilities like irrigation, rural roads, access to electricity and telecommunications, etc. Talking about irrigation, while only about half of our farmlands are irrigated today, of this only 30 per cent is irrigated by canals. It has been reported that the Government has earmarked some Rs 53 billion in the current fiscal itself, towards irrigation. Now irrigation canals, when lined with lean concrete lining, makes a lot of difference in preventing seepage and loss of transported water (which can be as much as 40 per cent of discharge), and also in the velocity of water, which in turn reduces the size of the canal for the same quantity of water, when compared with unlined canals! This is another positive and beneficial application of cement/concrete that we must promote on the basis of cost-benefit analysis.

We look froward to your views on this annual issue of Indian Cement Review, which celebrates the strong connect between Cement and Infrastructure.

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