Sunday, June 22, 2014

India’s roads could pave the way to growth for the cement industry
Photo: Min Post
16 June, 2014: Reports in the press suggest that India’s new Road Transport and Highways Minister, Nitin Gadkari, is interested in making a deal with cement majors across the country to secure long-term supply arrangements for the construction of concrete roads. A cost comparison study between concrete and bitumen roads has already been commissioned, but local media speculate that the initial cost of concrete roads (which is thought to be about 15% higher than bitumen) could be brought down by entering into long-term deals with cement producers.

Concrete roads require less maintenance than bitumen and are better able to withstand the extreme weather conditions experienced in parts of the country. Some 50+ road projects are in the pipeline, but have not yet been started. Addressing the press at his first press conference, Mr Nadkari said: “Hurdles on the way of 50 mega road projects would be removed soon and a reward and punishment system would be introduced in the department so that accountability is fixed. There will be zero tolerance for corruption and delays."

If all 50 roads were to be constructed with concrete rather than bitumen, it would be a major win for the cement industry, which has suffered from so-called ‘policy paralysis’ in recent years. Many companies predicted an improvement in demand in their first quarter results, noting that the elections should spur on infrastructure development.

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