A most important material for building is cement that holds the structure. It is extensively used for the construction of roads, buildings, and another building structures. In the world India is holding the 2nd position for cement production. The cement industry accounts around 67 per cent for housing from the total demand. Around 350 million tons per year cement is produced by India. The expected prediction for the production of cement is near 550 million tons by the year of 2020. The Indian government has taken an initiative of ‘Housing for All’ and that gave a solid boost to the cement industries of India.
“As per DIPP data, industry volumes increased by 11% year-on-year to 30 million tons in January 2019—we note that strong volume growth was despite a high base. Management narratives indicate strong demand from the infrastructure sector even though demand from the trade segment is relatively subdued”, said by Kotak Institutional Equities in a report on 27th March.
The cement industries of India have witnessed a huge change due to the focus of different companies on various sectors like, building international magnitudes, redesigning, elevating capacities of plants to cope up with the continuous competition. A total of 188 massive cement plants along with 365 small cement plants that have bestow 97 per cent of whole capacity. The production of cement and gypsum accumulated the Foreign Direct Investment around USD 3.1 billion in April 2000 to 2015.
What is PMAY?
PMAY (Pradhan Mantri Awas Yojana) that is, ‘Housing for all’ has launched by our respected Prime Minister Shri Narendra Modi in 2015. It is a home loan scheme that provides home loan with interest subsidy to the people for purchasing or improving or constructing their house. Basically, it is an initiative taken by the Indian Government that aims to provide budget friendly housing to the poor people in urban areas.
If you want to apply for the subsidy loan for houses under PMAY, you have to fill up separate application form of home loan. After completing the form fill up, you will submit the from straightly or via any urban local bodies. But keep one thing in your mind, if you or your family member is owner of a pucca house in any state of India then you are not eligible for PMAY.
How the cement industry is growing when PMAY is beneficial to this industry?
The government of India has aimed to increase the investment for infrastructure to $1 trillion in the year 2012 to 2017 by the 12th 5-year plan. The Indian government is also making a plan to increase the population over one lakh by improving the cities. A large demand for affordable housing and urbanization will expand the demand for cement industries. The experts of industries are predicting that affordable houses under PMAY will drive the demand of cement for paramount levels (2 per cent) including the housing budget from 16,000 crores to 23,000 crores in economic year 2017.
However, the developments viz, road constructions, buildings, highways, flyovers and metro projects will definitely expand the demand of cement. Near 7.5 million houses have been completed under PMAY from last three months and that appears an impressive beneficial for cement producers like Ultra Tech cement Ltd. and Shree cement Ltd. Also, a contribution of more than 60 per cent is responsible for overall growth in demand for cement in India followed by commercial and infrastructure property. So, we can see that PMAY influences cement industries in India. Hence, the demand growth in cement industry will improve up to 70 per cent in next few months due to the scheme of home loan (PMAY). But the price of cement and profit margin is non- predictable in upcoming years.