GST Restructuring: A New Dawn for Cement Sector

The GST rationalisation policy will lower cement prices, reducing construction costs. From September 22, cement will be taxed at 18% instead of 28%. This change is seen as beneficial for the cement industry, potentially boosting demand, especially in the affordable housing segment, despite expected moderate growth.

The recent GST rationalisation is set to bring significant changes to the cement industry, with prices expected to drop by Rs 30-35 per 50 kg bag, as stated in a report by India Ratings and Research (Ind-Ra). Starting September 22, the GST on cement will decrease to 18% from the current 28%, following a GST Council decision to establish a two-slab tax structure.

According to the report, this tax overhaul is a 'structural positive' for the cement sector and is anticipated to boost demand within the affordable segment, which has recently experienced low activity. Ind-Ra suggests that companies are likely to pass on the cost savings to consumers, leading to reduced prices for infrastructure and housing projects.

However, while softening consumer prices might lead to some shifts to premium brands favoring tier 1 companies, the overall demand growth is expected to remain between 5-7% year-on-year. Ind-Ra has noted that the seasonal lull due to monsoon is likely to lead to single-digit growth in the second quarter of FY26, despite a promising start to the current fiscal year.

(With inputs from agencies.)