The Indian paint and coatings industry is riding high on the growth in the Indian automobile industry, new construction in the housing segment, and improving infrastructure throughout the country. Thirty percent of the paint business is comprised of new construction projects.

1. INDIAN PAINTS AND COATING INDUSTRY
The industry is estimated at approximately USD 6 Billion, where the organized sector accounts for 65%
of the total market. The top 5 companies control 80% of the organized market. And the unorganized
Sector consists of about 2,000 units having small and medium-sized paint manufacturing plants.
Asian Paints has created a nationwide marketing campaign focusing on all small interior markets. Not
only was the company able to establish itself in interior markets, but the demand also percolated to
main towns allowing the company to enlist the support of large customers. Major players in India are
Asian paints capturing 54%, Berger paints at 17.5%, Kansi Nerolac at 15.4%, and Akzo Nobel at 10.9%.
Some of the international players are already present in India's paint and coatings market, but mostly
for industrial coatings. They include Akzo Nobel, BASF, Henkel (pre-treatment chemicals), PPG, ICI
(decorative), and DuPont (auto refinishes).
The Indian paint and coatings industry is riding high on the growth in the Indian automobile industry,
new construction in the housing segment, and improving infrastructure throughout the country. Thirty
percent of the paint business is comprised of new construction projects. GDP growth projections of 6
to 6.5% in the current year mean a growth of 9-10% percent in the Indian paint and coating industry.
The growth will be 12-13% in the industrial segment and eight to nine percent for decorative paint.
The current trend in macroeconomic numbers clearly shows signs of improving the economy. The
government has also shown its intent on furthering the reform momentum to revive investments and
improve governance. Reserve bank of India, taking cues from the current inflationary trend has
already eased interest rates and is expected to bring out more revisions going forward. Government
initiatives in major sectors like Housing, Automobiles, and Infrastructure will trigger fresh
opportunities in all paint segments. Further, softening of international crude and commodity rates has
eased cost pressures on the industry. All this is positive for the Paint and coating Industry. With the
young population, particularly belonging to the middle and emerging middle class having rising
aspirations, consumption of paint and coating is bound to increase at a steady rate from the current
average of 4 Kgs per capita in the coming years.
The decorative category accounts for 70% of the overall paints market in India in value terms while
the Industrial category accounts for 30%. The demand for decorative paints is a direct demand and
mainly arises from household & building painting. Demand in the festive season (September-
December) is significant, as compared to other periods.
Certain drivers propelling the growth of the paints and coating market in India are:
 Improved economic growth and lower inflation levels resulted in increased consumption.
Historically, the Indian paint industry has grown close to 1.2 times GDP growth.
 Rising demand in Urban India, attributable to increased purchasing power and changing
consumer preferences.
 Rising demand in Urban India. Rural India undergoing transformation; demand rising in Tier II
and III cities
 Increased purchasing power and changing consumer preferences
 Reduced duration of painting cycles from about 6-8 years earlier to about 3 - 3.5 years
currently

2.  Rising demand in the auto industry, due to falling crude oil prices, new product launches,
expected interest rate cuts Government’s mega push on infrastructure
Another factor boosting the paint and coating market is the growth in the automotive industry which
creates a huge demand for industrial paints and coatings. The Indian auto industry is amongst the
emerging markets in the world with an annual production of 23.37 million vehicles in FY 2014-15. India
is one of the fastest-growing automobile markets and an emerging auto hub. It is expected to witness
a growth of 12% till 2020 in the automotive industry. The Indian market has also seen a technology
shift from 1K to 2K and from solvent to water-base with increased environmental awareness.
India's demographic profile is unstable and is changing in a way that is quite favorable to economic
growth. Growth of the working-age share of the population and increase in the number of nuclear
families is fuelling the rise in per capita demand for paints and coatings. Fulfilling needs to look unique
becomes possible with more disposable income at the hands of people which is seen to be on an
upward trend.
Riding on the back of a real estate boom, paint and coating companies are extremely bullish on the
Indian market, which is among the fastest-growing markets across the globe. For instance, Kansai
Nerolac is also planning an 18 kilotons plant at a cost of USD 10 million, which is expected to
commence production by 2019. Nippon is also investing approximately USD 12 million in
manufacturing facilities in Gurgaon and a 25-acre unit in Chennai.
Certain initiatives by the government have fuelled the growth of paints and coatings in India:
Housing for all by 2022: The government has launched the 'Housing for All by 2022' program for the
rehabilitation of slum-dwellers and the promotion of affordable housing for the urban poor. The
target is to provide nearly 20 million houses over seven years. The scheme envisages rehabilitation
of slum dwellers with the participation of private developers, promotion of affordable housing for
weaker sections through credit-linked subsidy, affordable housing in partnership with public and
private sectors, and subsidy for beneficiary-led individual house construction or enhancement.
Smart City Mission: The government of India has a vision of developing 100 smart cities as satellite
towns of larger cities and by modernizing the existing mid-sized cities. A total of USD 14,000 million
has been approved by the Indian Cabinet for the development of 100 smart cities and the
rejuvenation of 500 others.
Bharat Mala Project: The scheme envisages 5,000 km of roads - both construction and upgrades - for
USD 2,000 million. The road network will stretch from Gujarat in the west to Mizoram in the east
and cover 10 other states.
All the factors along with the growing population, increasing disposable income, high standard of
living, increased commercialization, and urbanization, among others are expected to lead the Indian
paints and coatings industry with high growth in the next five years.