The Indian paints industry, valued at Rs 1,110 billion in FY24, is positioned for substantial growth, projected to reach Rs 2,640 billion by FY33, according to Asit C Mehta Investment Interrmediate’s (ACMIIL) latest report. Factors driving this growth include rising urbanisation, improved disposable incomes, and government initiatives like the Pradhan Mantri Awas Yojana and Smart Cities Mission, which bolster housing demand and infrastructure development.
The Indian paints industry, despite recent pressures, is projected to grow at nearly twice the rate of the nation’s GDP, fueled by economic expansion, urbanisation, and government infrastructure initiatives. Historically dominated by a few large players, the market is now facing new entrants and evolving strategies from established brands like Asian Paints, Berger Paints, and Kansai Nerolac, which are leveraging their distribution strength and strong brand loyalty to maintain market share.
Growth in the decorative paints segment is further supported by a consumer shift towards water-based and premium paints, rising per capita paint consumption, and government schemes like ‘Housing for All,’ which is expected to drive demand across urban and rural areas.
Competitive Landscape and Market Dynamics
The industry, largely dominated by the decorative paints segment (70 per cent), features major players like Asian Paints, Berger Paints, Kansai Nerolac, Akzo Nobel India, and Indigo Paints. The report highlights the challenges arising from new entrants like JSW Paints, JK Cement, and Birla Opus, which aim to capture market share with aggressive pricing strategies and attractive dealer incentives. The presence of these new players is expected to intensify competition within the sector, particularly impacting pricing and margins.
“The Indian paint industry has historically been resilient, growing at 1.5–2 times the GDP growth rate,” says Mrunmayee Jogalekar, an analyst at ACMIIL. “With India’s GDP projected to expand significantly in the coming years, we anticipate continued demand growth across both decorative and industrial segments.”
Asian Paints and Its Market Dominance
Asian Paints, the sector leader, commands a distribution network unmatched by its competitors, reaching 160,000 retail points across the country. This extensive distribution provides the company with substantial pricing power and brand loyalty, a key advantage as competition heats up. “Our market leadership and distribution strength give us confidence to navigate through competitive challenges,” a spokesperson for Asian Paints has been quoted in the report. “We remain focused on expanding our portfolio, including products targeting the unorganised segment.”
To capture the lower-income segment, Asian Paints launched Neo Bharat Latex, a budget-friendly paint aimed at competing with unorganised players. This move reflects a broader trend of established brands entering budget segments to expand their consumer base.
Rising Demand for Premium and Functional Paints
India’s paint consumption per capita remains below the global average, presenting opportunities for growth. The demand for premium, functional paints is on the rise, driven by preferences for features like odour-resistance and durability. Kansai Nerolac is capitalising on this trend with a focus on high-quality finishes and premium industrial coatings, helping the company improve its gross margins by 162 basis points over the next three years.
“We’re witnessing a shift towards premiumization,” said a Kansai Nerolac representative in the report. “This is not just in decorative paints but across our industrial products as well, where quality and durability are crucial.”
Challenges and Margin Pressures
The entry of new players brings potential challenges to the sector. Birla Opus, for instance, is deploying an aggressive dealer acquisition strategy, including higher margins, discounts, and free tinting machines, forcing incumbents to review their dealer engagement models. Additionally, raw material costs, largely influenced by crude oil prices, remain a concern.
Freight expenses, often dependent on oil prices, are another critical cost driver. Akzo Nobel India has managed to maintain lower freight costs due to its premium product focus. Meanwhile, Indigo Paints has high logistics expenses because of its limited manufacturing footprint, a challenge it is addressing through capacity expansion.
Strategic Investments and Future Prospects
Despite the competitive pressures, incumbents are confident in the sector's long-term potential. Capacity expansions are underway across all major players, with Grasim’s Birla Opus expected to add approximately 31 per cent capacity to the industry by FY25. “Our investment reflects the untapped potential in India’s paints market,” a Birla Opus spokesperson said. “We’re committed to establishing a strong footprint nationwide and becoming a top player in the decorative segment.”
Industry players also see opportunities in the shift towards water-based paints and the increasing adoption of putty and waterproofing solutions. The government’s focus on infrastructure is further expected to bolster demand, especially in the industrial paints segment catering to sectors like automotive and marine.
