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Overview of the Cement Industry in India

Cement is primarily used in the production of concrete/ RCC. Used as a construction material, cement in the form of RCC can be used in almost any shape desired and, once hardened, can become a structural (load-bearing) element. It is, therefore, indispensable construction material for building and construction work. This is why the cement industry is considered a core industry in the country. Moreover, it is one of the most advanced industries in India and has played a significant role in the overall economic growth of the nation post-independence. Growing urbanisation has created an ever-increasing demand for cement. The development of critical industries, like the cement industry, is an indicator of the economic growth of a nation. As a business opportunity, the cement plant is highly profitable and possesses certain advantages. Cement is cheap, adaptable and in strong demand regardless of many market indicators. However, the cement industry is considered a polluting industry due to the number of emissions produced in kiln firing. Grinding the clinkers also generates dust, which can be irritating and dangerous to health if inhaled by humans and animals. Therefore, a cement plant must be equipped with air scrubbers to trap as many air pollutants as possible. Filtration systems are deployed in cement grinding facilities to reduce the escaping dust. In this write-up, we will be learning about the opportunities in the cement industry and how one can set up a cement manufacturing plant in India.

Advantages of setting up Cement Plant in India

Nature of market: The cement industry shows an Oligopoly behaviour, where prominent players have partial pricing control and the market is dominated by a small number of suppliers. Though the initial investment can vary depending on the production capacity, a cement manufacturing plant can be set up with relatively less hassle than other industries.

Low threat from substitutes: There are no absolute substitutes for cement in the market. Therefore the industry is practically shielded from being replaced with a substitute.

Low Environmental Impact: though the cement industry is considered as polluting industry, the measures taken by the government to make curb pollution, such as making control measures mandatory, issuing guidelines for the co-processing of plastic waste in cement kilns, use of alternate fuels (RDF), and regular monitoring of the manufacturing process has helped us become one of of the world’s greenest cement industry.

Huge demand for cement in the future: Estimating by the huge investment plans of the government in infrastructural projects after the announcement of the Union Budget of 2022-23, such as infrastructure development, affordable housing schemes, road projects etc., to fuel the economy, the demand for construction materials like cement will be seeing an exponential boom. Added with the increasing demand by the private sector, the demand for cement from the domestic industry will be huge in the near future.

Increasing Investment: FDI inflows in the cement industry that is related to the manufacturing of gypsum products (cement) reached 5.48 billion USD by March 2022.

The cement manufacturing process in India

One of the essential requirements to build a successful business involving the production of goods is understanding the manufacturing process. The most widely used cement is Ordinary Portland Cement (OPC). There is also pozzolana portland cement (PPC), white portland cement, quick-setting cement, refractory cement, etc. In the case of Portland cement, there are two popular manufacturing processes: dry and wet. The manufacturing consists of the following stages.

Extraction: The quarrying method is used in Cement Industry to extract hard rocks such as limestones, slates, and some shales to be used as raw material. If the cement plant is performing the extraction, it will need specific clearance for extraction of minerals from the State Director of Mines and Geology.

Crushing and milling:  The limestone mined is unsuitable for use. It needs to be crushed and stacked to be suitable for going ahead to the Cement Industry. This stage calls for proper pollution control measures, as the SPM released in the process can harm the environment and its inhabitants.

Mixing and preheating: at this stage, a pre-heating chamber consisting of cyclones is utilised. The raw materials are passed through the apparatus and turned into oxides. The hot gases are produced from the kiln to reduce the consumption of energy and make the cement manufacturing more eco-friendly.

Heating: The heating, also known as the kiln phase, is the principal stage in cement manufacturing. Clinker is produced from the mix through a chemical reaction between calcium and silicon dioxide compounds.

Cooling and final grinding: After leaving the kiln, the clinker is cooled down from 2000°C to 100°C-200°C by passing air over it. Different additives are also combined with the clinker at this stage. In the end, the clinker is ground to produce the final product- cement. 

Licences and Documents needed to start a Cement Industry

While cement manufacturing is a growing and profitable business, it calls for proper planning and execution of the unit's setup, knowledge of manufacturing stages and the application for all licences and authorisation for different activities involved In manufacturing. Licences and clearance required for setting up a cement plant in India are

Registration/ Incorporation of Company

A cement manufacturer needs company registration/ Incorporation, as registering the company makes your business a distinguished entity, giving it a legal existence. The company registration process is done under the Ministry of Corporate Affairs.

Pollution NOC/ Consent Certificate

As Cement Industry falls under the Red category list of Industries, the establishment will need a Pollution NOC certificate under the Red category from the respective State Pollution Control Board (SPCB) / Pollution Control Committee (PCC). The document required for the 2 stage Consent process, i.e. Consent to establish and Consent to Operate, are

  • Correctly filled application form of the concerned SPCB
  • Signed undertaking
  • Site or layout plan with a roadmap 
  • Detailed project report
  • Details of the manufacturing processes and finished products.
  • Proof of installed machinery and the capital cost of the land, building, and plant machinery)
  • Water balance, water source and required quantity 
  • Land ownership documents such as rent/lease agreement
  • Industry registration documents
  • Consent fee (as applicable)
  • Any other document mentioned in the application

Environmental Clearance

Cement plants with more than one million tonnes/annum production capacity will fall under category A of the EIA notification, while those plants with less than one million tonne/annum production capacity and all standalone grinding units will fall under Category B. Regardless of the production capacity all cement plants will require Environmental Clearance from the respective authorities. The list of documents needed in this regard is

  • Detailed Project Description (including the project's name, location, the proposed breakup of area, water requirement, waste generation etc.)
  • Site/ Layout plan
  • Proof of installed machinery
  • Proof of Land Ownership
  • ID proof of Signatory
  • Quality test Report (wherever applicable)
  • Proof of mitigation options adopted
  • Proof of Electricity and water connection


Factory’s Licence

The Cement manufacturing plantmust register themselves as per section 6 of the Factories Act, 1948. Documents required for obtaining a factory licence depend upon the checklist issued by the respective state. However, standard documents needed are

  • Duly filled in the application form
  • Application Fees
  • Existing building plan
  • List of Partners or directors with their addresses.
  • NOC from other partners / Board Resolution by Directors under sections 2(n) and 7 of the Factories Act, 1948.
  • Proof of Occupier as Director/ Proprietor / Partner of the factory.
  • Proof of sanctioned load of electricity (copy of electricity bill).
  • Proof of occupancy (copy of rent agreement/ownership proof).
  • Flow chart of the manufacturing process.
  • List of raw materials used in manufacturing.
  • List of machinery installed Such other particulars as the Chief Inspector/Director (ISH) may require.

Additional Licences and Authorisations required for setting up Cement Industry

  • Business Registration
  • ISI certification (Regional Office of the Bureau of Indian Standards (BIS))
  • MSME Registration(from the centralised online portal)
  • Trademark Registration
  • Fire NOC (from State Fire department)
  • IEC Registration (Regional Office of Director General of Foreign Trade)

Scope and Market Overview of Cement Production in India

As India has a lot of potential for development in the construction and infrastructure sector, and the cement sector is expected to benefit from it largely. Accounting for over 7% of the global installed capacity, India is today the second largest cement producer globally. If we see the distribution of market share, 98% of the production lies with the private sector. India's cement production is expected to increase at a CAGR of 5.65% between FY16 and FY22, driven by demands in roads, commercial real estate and urban infrastructure. The cement consumption is expected to grow at a CAGR of 5.68% from FY16- 22. Today, the installed capacity of cement manufacturing in India is 500 MTPA, with a production of 298 MTPA. India's cement production capacity is will reach 550 MT by 2025. For instance, the production capacity of the Cement Industry increased by 19.4% in June 2022 compared to June 2021.

The cement demand is estimated to touch 419.92 MT by FY 2027, driven by the expanding market of sectors that use cement, i.e., housing, commercial construction, and industrial construction. In the case of exports, similar growth indicators can be observed. As per DGCIS, export of Portland cement, slag cement, aluminous cement supersulphate cement and similar hydraulic cement stood at 118.15 million USD in FY21. India exports cement to Nepal, Sri Lanka, the US, the UAE and Bangladesh. India is on the path to becoming the leading exporter of clinker and grey cement to Africa, the Middle East, and other developing nations in the next ten years.

How can Enterclimate assist you?

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With our team of licencing and authorisation experts, we provide comprehensive assistance for all procedural stages of your cement plant setup. Focus on your business and leave all legalities related to the business setup with us.

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Our team comprises domain experts from diverse fields like law, environment and licencing who can plan, manage and assist you in obtaining licencing and permissions for your cement manufacturing plant.

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Our client relations executives ensure that our clients are made aware of changes in the laws and regulations that concern them and provide assistance for the same through our team of seasoned lawyers, CAs and CS.


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