6 Growth Drivers of the Indian Paint Industry

The paint and dye stuff is a segment in the broacd chemical industry. The industry in itself has experienced some major growth in recent years. The Indian paint industry has undoubtedly achieved a remarkable success and has set standards for itself to compete with the global standards.

Classification of Paint Industry

The paint sector is again classified as organized and unorganized. The organized sector has witnessed a growth of over 15-18% annually. The spurt in the domestic per capital consumption, rising disposable income, improving standard of living, and rising demand in Indian automobile industry are some of the factors which have contributed to the growth of the industry. The sector has also witnessed some tough competition from neighbor China which is known for the supply of low cost paints.

Some of the major players in the industry are Asian Paints, Kansai Nerolac, Berger, Akzo Nobel etc.

Read on GWI Paint Companies/ Manufacturers (Asian, Nerolac, Berger) in India.

Growth Drivers of Indian Paint Industry

Major growth driver of Indian Paint Industry are elucidated as under:

1. Increasing level of income and education – There has been considerable rise in the proportion of young population. Also a increasing trend in the disposable income has been witnessed which is leading to a change in consumer habits. The Indian economy is shifting from a savings economy to a spending economy. With more income at disposal people are opting for better products and paint is no exception.

Education too has helped in the making people brand conscious. People look to seek value for their consumption. As far as paint is concerned, the companies offering additional features like non-toxicity, weather protection, texture, eco-friendly production, etc. attracts more demand these days. These products also help the manufacturers earn a better premium as compared to the regular paints thus a scope of earning high margin is created.

2.Increasing Urbanization – Urbanization has resulted in a shift from temporary house to permanent houses. People opting for permanent house in urban areas are looking for well-designed interior and exterior aspect. As a result this calls for more house being painted using medium and premium paints. Interiors are becoming a matter of style statement for the the people residing in urban areas and thus an increase in the per capita consumption of paint is witnessed. The overall demand of the paint is also driven by such behavioral attribute of people.

3. Increasing share of organized sector – There has been considerable decrease in taxes on raw materials. This has helped improve the status and position of the organized players. The organized sector is expanding and its distribution network is growing. The adoption of installing tinting machines at retail outlets has helped the sector grow at a much faster rate. These tinting machines offers a wide variety of color shade options to choose from. The unorganized players on the other hand are unable to provide such facility as they face capital crunch.

4. Growth of Realty, Automobile and Infrastructure sector – Paint industry is highly dependent on development of realty and housing sector. For the total paint demand, over 70% is generated from the decorative segment. Automobile segment generates over 66% of the demand of industrial paint. Infrastructure segment creates direct and indirect demand for paints through supporting the growth of the realty, automobile, FMCG and other industries where paint is used. The growth potential in the 3 sectors is immense and paint industry being dependent on these is expected to show strong growth.

5. Availability of financing options – Easy financing is available for housing and automobile. This is expected to favour more people to buy houses and travel in personal vehicles. This in turn drives the growth of housing and automobile sector for which paint industry get its share

6. Increasing Penetration in the Rural Markets – Distemper segment is the primary product used in rural areas. Thus it is dominated by the unorganized players. Demand is dependent on agriculture which again is dependent on the monsoons. Development of irrigation helped in reducing the dependence on monsoon. Thus with the modernization of agriculture and accompanying development of rural India, consumer preferences are expected to improve. Distribution network is increasing in rural areas to tap the relatively untapped market.

Thus to conclude we can say that these factors supported by the increasing penetration of the paint companies will help drive the demand of paint and the sector will grow manifold in coming years.