India’s major cement producers are expected to invest ₹12,000–₹13,000 crore over two years to increase their green power capacity to 5.8 GW–6.0 GW (gigawatts) by March 2028, from around 4.0 GW in March 2026, according to ICRA. The expansion, representing growth of nearly 50%, is expected to reduce energy costs and support cement producers’ profitability.
The additional capacity could generate annual savings of ₹6,200–₹6,700 crore, implying a payback period of 1.8–2.2 years, the rating agency said in its September 9 statement. A 25% green power replacement level could lower power and fuel costs by ₹75–₹80 per tonne and support operating margin expansion of 140–160 basis points.
ICRA’s sample comprises UltraTech Cement, Shree Cement, ACC, Ambuja Cements, Birla Corporation, Dalmia Bharat and The Ramco Cements. Together, these companies accounted for 65% of installed cement capacity as of March 2026. According to ICRA, the sample’s green power capacity had risen from approximately 1.2 GW in March 2023 to 4.0 GW in March 2026.
“The highly energy-intensive nature of cement manufacturing, coupled with persistent fuel price volatility and supply-side risks, is driving the sector’s transition towards green power,” said Anupama Reddy, Vice President and Group Head, Corporate Ratings, ICRA. “Every 5% increase in green power replacement can lower power and fuel costs by ₹ 15-₹16 per tonne.”
The shift is being driven by the need to manage fuel cost volatility and improve cost competitiveness, alongside sustainability commitments. Major producers have outlined net-zero emission roadmaps over the next 15–20 years, with measures spanning green power, blended cement, alternative fuels and clinker efficiency improvements.
However, electricity consumption accounts for only 10%–13% of the industry’s total emissions. Calcination contributes 57%–60%, while fuel combustion accounts for 27%–30%, highlighting the need for measures beyond electricity replacement to reduce emissions across cement production.
“Blended cement remains an important lever for reducing emissions, although its adoption is expected to increase gradually due to application-specific requirements and customer preferences,” Reddy said. India’s thermal substitution rate is around 6%, substantially below global benchmarks. Major cement companies are targeting 10%–15% over the next three to five years, using alternative fuels such as biomass, municipal waste and industrial waste. ICRA expects this shift to help lower emissions and improve profitability.
Producers are also evaluating carbon capture, utilisation and storage (CCUS). The government has proposed an outlay of ₹20,000 crore over five years to support deployment across key sectors, including cement. Large-scale commercial adoption is nevertheless expected to remain gradual because of high implementation costs, substantial energy requirements for carbon capture and processing, and limited infrastructure for transporting and storing carbon dioxide.
Financing these investments is another part of the transition. Some leading cement manufacturers have tapped sustainability-linked bonds and loans to fund renewable power projects, waste heat recovery systems and other sustainability initiatives. Although green financing remains at a nascent stage in India, ICRA expects it to become a more significant funding avenue as producers undertake energy-transition expenditure. The planned spending therefore links the sector’s emissions-reduction programme with efforts to contain manufacturing costs and strengthen profitability.
