Coatings World - May 2008

The Indian Paint Industry
The Indian paint market is poised to grow at a steady rate over the next decade
fueled largely by a growing economy and changing consumer attitudes.
BY PARTHASARATHY DEVARAJ

CONTRIBUTING EDITOR

The Indian paint industry has been growing at an average rate of 13% over the last five years. However, the per capita paint consumption in India is only 1.2-1.4 liters. The industry is less than half the size of the Chinese market by volume and about one fifth of the U.S. market by volume. Even Sri Lanka and Pakistan have higher per capita paint consumption.

India’s market is dominated by the decorative paint and coatings segment. Architectural coatings largely used in households constitute almost three-fourths of the market’s value. The other large segments are automotive OEM paints, automotive refinish paints, protective coatings and powder coatings.

There are many players in the Indian paint market. The top four companies—Asian Paints, Berger, Kansai Nerolac and ICI (India)—constitute more than 5.5% of the Indian domestic market. In addition to these, there are more than one thousand other companies in both the organized and unorganized sectors. The unorganized sector itself constitutes 25-30% of the market.

A number of foreign players have subsidiaries in India including: Jotun (powder, marine and decorative); Akzo-Nobel (powder, protective and automotive refinish); Nippon Paints (decorative); Choguku (marine); DuPont (automotive refinish); and Becker (coil coatings). Others like Sherwin Williams are in the process of entering India. As a result, all the leading international players in the decorative, automotive OEM and automotive refinish paint markets will be operating in India.

India also imports a small volume of specialty wood finishes including polyester and polyurethane water-based coatings, and special effect emulsions. The Indian paint market has the potential to grow over the next decade at 15-20% per annum as the current per capita consumption is much lower than other developing countries and less than half of China.

The low per capita paint consumption until recently can be linked to the large number of kuccha (temporary), and semi-pucca homes (semi-temporary), low purchasing

Above is a blue Indian house in a village in Hampi, India. The Indian paint market has the potential to grow over the next decade at 15-20% per annum.

power, the small size of homes, the long repainting cycle, and use of chuna (lime powder) and French polish (paint substitutes).

In the decorative segment, the next decade should see a value growth in the region of 15-20% per annum due to reduction in poverty levels, construction of new homes, higher inclination to spend, increasing décor-conscious-ness and gradual replacement of chuna.

The automotive OEM segment too should grow at least at 15% per annum powered by the projected high growth in the automotive segment. Thus if the Indian economy maintains its growth rate at the recent high levels, we should see value growth of at least 15% annually in the Indian paint industry over the next five years.