Anand Rathi:: India Consumer- Key takeaways from meeting with President of ISSPA

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India Consumer
Key takeaways from meeting with President of ISSPA
We came back positive on growth prospects of India’s paint
industry, from our meeting with the President of the Indian
small-scale paint association (ISSPA). As per the association, the
paint industry in India would grow at 1.5x GDP, despite
challenges such as high petchem duty and lack of government
regulations on repainting.

 Paint industry growing at ~16%. The ISSPA President
indicated that the paint industry in India, including organized
players and SMEs, is growing at ~16%, at 1.5x GDP. Current low
per-capita consumption in India vs. other countries ensures
sustainable growth in the medium-to-long term.
 Water-based products growing faster. Water-based paints are
growing faster, as raw material prices of such paints are lower and
lesser volatile. Solvent-based products are growing at lower rates,
with frequent changes in the duty structure on petchem products
and volatility in crude oil prices,
 Steep duties on petchem products restrict imports, reducing
threat of foreign competition. This helps Indian players to grow
steadily. But the higher cost of raw material imports in turn
impacts exports.
 Government regulations likely to drive growth. The President
indicated that imposition of some government regulations, such as
repainting houses after every two years as in other developed
countries, and regular checking of occupation certificates will
ensure steady growth for the paint sector in India.
 Understanding rural consumers to drive growth. The
President sees understanding rural consumers as necessary for
market share growth. Launch of small SKUs of paints helped
Asian Paints grow its market shares in rural areas.
 Gujarat and South India, fastest growing markets. As Gujarat
is seeing strong investments in various industrial segments, the
President expects strong growth momentum there. It also expects
South India to grow the fastest. Lack of investments by paints
companies in East India will impact growth in the region.
 SMEs continue to dominate industrial paints. As large players
focus on creating brands, and more on decorative paints, the
industrial paint segment will continue to be dominated by SMEs.