Painting A Colourful Future
The affinity towards new designs and aesthetics by the young real estate customers is changing the future of decorative paints market in India. Construction Times presents the prevailing trends and emerging opportunities.
Decorative paints hold a majority share of around 70 per cent of the total paints market in India and the real estate market dominates in the decorative paints market with around 70 per cent market share. According to the latest CareEdge Report on Indian paints industry, the growth trajectory of the Indian paint industry is projected to ease, with an expected expansion of 9-10% in FY24, following two consecutive years of remarkable growth in FY22 and FY23.
Entry of new players
According to the CareEdge report, in recent years, the paint industry has seen the entry of several new business conglomerates, including Grasim Industries, Pidilite, and the JSW Group, who have joined the competitive landscape, challenging the established players. Also, the smaller players are adding more vigour in competition with the introduction of new products and formulations in paints and coatings.
Changing user trends
Urbanisation and modernisation are presenting a number of opportunities for the decorative paints market in India. Saurabh Agarwal, Managing Director, Kamdhenu Paints, is of the view, “As more and more people move to urban areas, there is a growing demand for new homes and offices. This is creating a significant demand for decorative paints. Additionally, the increasing disposable incomes of Indians are leading to a greater demand for premium and eco-friendly paints.” He also feels that, as the economy grows, more people will be able to afford to buy new homes and renovate their existing homes, which will lead to increased demand for decorative paints.
Demand and technology trends
The market is witnessing an escalating demand for decorative paints in the recent times. Urbanisation and modernisation are leading to a growing demand for new homes and offices, creating a significant demand for decorative paints. The increasing disposable incomes of Indians are leading to a greater demand for premium and eco-friendly paints. The growing construction industry in India is also driving the demand for decorative paints.
The rising awareness about home décor, especially among the young Indian customers, is also leading to an increased demand for decorative paints.
On the emerging technology trends in decorative paints, sustainable and eco-friendly paints are increasingly gaining prominence among the customers. Consumers are increasingly demanding sustainable and eco-friendly paints. Robotic painting is becoming more widely used in the decorative paints industry, as it offers a number of advantages over traditional manual painting methods, such as improved efficiency, consistency, and quality.
Major challenges
The key raw materials used in paint manufacturing are titanium dioxide, phthalic anhydride, solvents, pigments, resins, and other crude oil derivatives. The prices of key raw materials have remained elevated during FY22 and FY23 on account of supply-related disruptions during the pandemic and then the Russia-Ukraine war in turn impacting crude oil prices. However, prices of raw materials have started cooling from the second half of FY23, according to the CareEdge report.
Indian consumers are generally price-sensitive, and this sensitivity extends to the decorative paint sector. Companies must strike a balance between offering quality products and competitive pricing.
Another challenge is related to distribution of the products. “India is a country with diverse demographics and geographic regions. Efficient distribution of paint products can be challenging, especially in rural areas. Companies must have a robust distribution network to reach customers effectively,” says Arunava Paul, Associate Director, CareEdge Ratings. While the market leaders have a wider customer base, new entrants will require at least 3-4 years to match up to the distribution level of the existing players.
Market to grow further
The revival in real estate market has pushed the demand for decorative paints in residential and commercial real estate segments. Also, with urbanisation is on the rise, more opportunities will be knocking on the doors for decorative paints in future.
“The Indian paint industry is projected to surpass the Rs one lakh crore mark by the fiscal year 2027-28. This growth is poised to trigger the expansion of current participants, the entry of new players, heightened investments, surging demand, and an overall broadening of the market,” says Mahesh Anand, President, Nippon Paint India (Decorative Division).
The demand from real estate is expected to be robust in FY24 on expectation of significant project completion, and increased government spending on affordable housing and infrastructure. Demand for decorative paints increases due to a rise in both repainting activities and housing sales. About 20% of the demand for decorative paints comes from new constructions, while the demand from repainting accounts for 80% of total decorative paint demand.
On the future of the decorative paints market in India, Agarwal says, “I am very optimistic about the future of the decorative paints market in India. We expect the paint industry to grow 9-10% in FY24. This growth will be driven by a number of factors, including the increasing urbanization and disposable incomes of Indians, the growing construction industry, and the increasing demand for premium and eco-friendly paints.”
A shining future
The decorative paints market in India is expanding and growing consistently over the years. With the designs and aesthetics among the customers are changing, there is a promising future for new developments and product expansions in the decorative paints market.
