The Impact of Indian Government Policies on the Cement Industry

Why Government Policies Matter for the Cement Industry

Government policies have played a significant role in the fast-paced growth and progress of the cement industry in India. They affect more than taxes- the policies directly impact the growth, innovations and operations of the cement industry.  In a developing economy such as India, construction and infrastructure are major catalysts for modernisation, sustainability and expansion of the industry. 

Adapting the government policies for the cement industry can contribute to it staying ahead of the times, innovating new technologies, pushing sustainability and building an environment of progress. 

Infrastructure Initiatives By The Government 

The government of India has introduced effective projects to boost infrastructural development and in turn, cement demand. Some of these projects are- 

• Bharatmala Pariyojana– The primary objective of the scheme is improving the road infrastructure, better connectivity and constructing new roads connecting border areas and along ports and shores. 
• Smart Cities Mission– This initiative was started in certain cities to transform their urban, social-economic and physical infrastructure to provide a clean, better quality of life to its residents.
  
• PM Gati Shakti Master Plan– The objective is to enhance India’s industrial productivity, boost connectivity through airports, ports, railways and highways, and lead to clean energy goals. 
• Pradhan Mantri Awas Yojana- This was to facilitate making housing more affordable and accessible to the moderate-income group of citizens. 
• National Highway Development Project (NHDP): The project was initiated to revamp and upgrade the national highway experience for the citizens, by widening to 4-lanes for the highways and 6 lanes for few major highways. 
• AMRUT (Atal Mission for Rejuvenation and Urban Transformation)- The mission was initiated to develop basic infrastructure in select towns and cities. Its main objectives are- the management of sewage, septage, water supply, water drainage, development of parks and green areas and non-motorized transport. 

These projects have taken the demand for good-grade cement up a few notches. The constant infrastructural progress in India has ensured that the cement industry offers a growing market share constantly. 

Regulations For Sustainability In the Cement Industry

In today’s times, environmental responsibility is being included in industrial operations. Cement is an industry that runs on high energy consumption. Hence, it becomes imperative for this industry to reduce its carbon footprint, adopt sustainable means of manufacturing, include waste management as part of the process and conserve natural resources. The Indian government has implemented regulations to ensure that sustainability becomes a part of operations. 

The government has introduced two policies in this regard that have been significant in transforming the process of manufacturing- 

1. Perform, Achieve, and Trade (PAT) Scheme

The scheme targets the reduction of energy for energy-intensive industries such as cement. To incentivise, companies are awarded Energy Saving Certificates (ESCerts) for overachieving energy-saving targets. The best part is that these certificates can be traded to create financial incentives for companies that fail to achieve energy efficiency. 

The cement industry has been impacted by the scheme in reduction of fuel consumption, adoption of technology like Waste Heat Recovery Systems (WHRS) that lead the energy efficiency mission. 

2. Environmental Clearances for Cement Plants

This has been transformative for the cement industry as it not only protects the ecological balance but also advocates responsible use of energy. Under this, the Ministry of Environment, Forest and Climate Change (MoEFCC) makes Environmental Impact Assessments (EIA) and Environmental Clearances (EC) mandatory for new projects. 

This means that all new projects have to go through a review process to gauge their environmental alignment. The companies are required to produce detailed accounts of waste management, resource usage and emission plans before the project starts- approvals are given only to projects that meet the sustainability guidelines. 

GST and Its Impact on Cement

When GST was introduced, the tax on cement was set at a high rate of 28%, which makes it extremely expensive, meaning a higher cost for the infrastructure sector. The construction costs going up also means that the affordable housing sector would face a showdown. Though the GST on cement is a challenge the industry faces, the GST on construction materials, set at 5%, has kept the cost of raw materials relatively low, meaning affordability in rural construction projects. 

Make in India and Atmanirbhar Bharat Initiatives

Make In India and Atmanirbhar Bharat initiatives have changed the way manufacturing occurs in India. They have encouraged the cement industry to source raw materials for manufacturing construction materials locally, expanding the capacity for manufacturing considerably. This has also led to new technology produced for grinding processes, thereby leading India to innovation. Lastly, local cement manufacturing has led to a major boost in exports, taking Indian make cement to global markets. 

Takeaway

Government policies have impacted the cement industry in every way- be it urban and socio-economic development, technological innovation, cost of cement,  sustainability inclusion impacting the environment in turn or promoting local manufacturing. These regulations and allowances have not only made the industry look at a more responsible way of producing but also propelled India’s infrastructural growth, progress and quality of construction. 

FAQs

1. How do infrastructure policies affect cement demand?

Cement is one of the main components of construction. Government-funded projects like highways, smart cities, and housing massively increase the demand for cement.

2. Why are there mixed feelings about GST in the cement industry?

While GST simplified logistics and reduced paperwork, the 28% tax rate keeps cement slightly expensive for end consumers.

3. How is JK Super Cement promoting sustainability?

By producing eco-friendly products like PPC and PSC, and investing in sustainable means of manufacturing through its units across India including waste heat recovery and use of renewable energy.