Apart from the influx of more global cement manufacturers, the cement transportation market will also benefit from favorable government initiatives related to various infrastructure projects and urban development, which can revive the housing sector also.
New analysis from Frost & Sullivan (automotive.frost.com), Strategic Analysis of Cement Transportation Market in India, finds that the industry dispatched 167.7 million tons of cement in 2008 and is expected to dispatch 263.8 million tons in 2014.
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The Government has raised budgetary allocation for roads under the National Highways Development Project (NHDP), which has considerably boosted cement consumption. Expected industry reforms from the new government are likely to result in an overall encouraging business environment.
"The recent four percent cut in the excise duty, relief on exports, and a bail-out package for the housing sector will further drive the revenues and enhance margins for the cement industry and thereby, its transport market," says Frost & Sullivan Industry Analyst Srinath Manda"
Despite the Government's interest in the cement housing industry, adverse tax policies and limitations in basic infrastructure facilities such as fuel, power, and transportation networks are restraining the growth of the cement industry in India and curbing the potential of the cement transportation market. This challenge will be alleviated to some extent by the recent appointment of a coal regulator by the government, a positive move for the cement industry as it will facilitate timely and proper allocation of coal blocks (a key raw material) to the core sectors, cement being one of them.
As cement is a high-bulk, low-value, freight-intensive commodity, transporting it over distances more than 400km becomes commercially unviable. This has resulted in regional cement participants serving regional markets. While inland waterways account for only a minor percentage of domestic cement transport, road is the main mode of transport, though rail is the preferred mode for most companies because it is the cheapest, fastest (for long distances), and safest mode of transport for cement.
"The southern region, with its large limestone reserves, has significant overcapacity, resulting in considerable net dispatches from the south to the west in 2008," notes Manda. "Meanwhile, the northern region dispatched about 4612 thousand tons of cement to central region and 2515 thousand tons of cement to western region during the same year."
Strategic Analysis of Cement Transportation Market in India is part of the Automotive & Transportation Growth Partnership Services program, which also includes research in the following markets: Strategic Assessment of Containerization Trends in India, Strategic Analysis of Metal Transportation Market in India, and Strategic Analysis of Liquid and Gaseous Cargo Transportation Market in India. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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