Paint market to grow 20% annually in next two years

Mumbai: The Rs 40,600-crore Indian paint industry is likely to see a 20 per cent compounded annual growth rate until 2016, says a study by business chamber Assocham.

This is due to increasing demand from retail consumers, on rapid urbanisation, and development of rural markets. The industry will reach the level of Rs 62,000 crore in the next two years, it said. A rise in disposable income of the average middle class coupled with increasing investment on education, urbanisation, development of the rural market and various launches of many innovative products will be major drivers, it said. India is the second largest consumer of paint in Asia.

"The Indian paint industry has seen a gradual shift in the preferences of people from the traditional whitewash to higher quality paints like emulsions and enamel paints," said D S Rawat, secretary-general, Assocham.

The rural market grew 20 per cent in 2013-14. Rural India's incremental consumption expenditure is growing well. And, the rural sector has a major share of the decorative paints segment. Thus, any benefit to the rural sector's disposable income is directly correlated to the paint industry's growth.

Besides, decorative paints are marketing well, backed by large advertisement campaigns and dealership networks. In FY14, per capita consumption of paint increased to a little over four kg, of which the decorative segment contributed 73 per cent at Rs 29,638 crore. The remaining Rs 10,962 crore was contributed by the industrial segment.

"Demands for decorative paints arise from household paintings, architectural and other display products. The demand for paint increases during festive seasons as compared to other periods," said Rawat.

The decorative paint market has been further segmented into emulsions, enamel, distemper and cement paints. Industrial paints are segmented into automotive coating, high performance coating, powder coating and coil coating.

The unorganised sector has around 35 per cent of the paint market. In the unorganised segment, there are about 2,500 units.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.