Over the years, the Indian paint industry has remained a consistent bright spot in the Indian economy. During the last year alone the industry's growth rate of 9% was greater than India’s GDP for the same period. A closer look at chemical market data suggests that at this growth rate, the paint industry will reach a valuation of ₹ 70, 000 crores by 2021-22. For the Indian paint industry, the future looks promising than ever before. Here are the 5 things that you must know about the Indian paint industry.
The 18% GST Breather:
While GST was initially viewed by pundits as a challenge for businesses, the central government's decision to bring paint within the 18% Tax ambit has greatly reduced the input cost pressure that the industry was under since GST implementation.
The Rupee Dependency:
Exchange rates also play a key role in determining profit margins for industry players. Most of the raw materials are imported and a weaker Rupee can be the reason for falling margins for industry players.
The GDP Multiplier:
The paint industry remains a primary feedstock for the Indian real estate, infrastructure, and automobile industry. These industries more or less drive the countries GDP. Growth in the Paint industry is an indicator of growth in these multiplier industries and vice-versa.
The Crude Oil Challenge:
The paint industry is strictly crude-based with crude oil amounting to nearly 50% of the input costs. Further, fluctuations in crude oil prices impact the costs of other materials too. Any big fluctuation in crude oil price is quite visible on daily chemical industry prices in India. This makes for an uneven playing field where small business cannot compete with bigger more established names who can easily dominate heavy price points. The big three i.e Asian Paints, Berger Paints, and Nerolac Paint command nearly 70% of the organized paint industry.
The Shift Towards Intelligent Paints
Today more and more countries are adopting stricter regulations and policies for saving our environment and climate. Traditionally, solvent-based paints have been known to emit Volatile organic Compounds(VOC) that transfers considerable heat and temperature to the environment. Today, the paint industry is adopting steps to encourage manufacturers and consumers towards environmentally friendly water-based paints.
Further, industry players are also looking at innovative ways to cater to consumer demands better and faster. Digital capabilities are being improved for stronger branding and creating a product portfolio driven by market demand and needs.
Riding on the back of rapid urbanization and a huge middle class with a strong purchasing power, the paint industry is looking at double-digit growth in the coming few years. To stay relevant and serve the varying consumer demands, the industry will have to adopt new technology across manufacturing and supply chains for accelerated growth and innovation.
Comments