Paints sector looks for consumption-boosting measures in upcoming Budget

The Indian paint industry is experiencing muted growth due to a slowdown in consumption demand, major players said on Friday.

 

Abhijit Roy, managing director and chief executive officer, Berger Paints India, said the last three quarters have seen a slowdown in the overall environment. “That’s true not only for paints but for all FMCG companies, especially in a discretionary category like paints.”

 

“Food inflation has been very high, and the priority of individuals is to take care of basic requirements,” he added.

 

Roy highlighted three challenges specific to the paints sector: a 5 per cent price cut taken last year, new entrants capturing some market share, and an overall slowdown in the discretionary category.

   

Anuj Jain, managing director and chief executive officer, Kansai Nerolac Paints, said growth had been muted over the last two years. “The industry growth in terms of volume in H1 was 3-4 per cent. In the last one or two years, the growth has slowed. The consumption slowdown is impacting paints as well.”

 

Sundaresan A S, joint managing director and chief executive officer, JSW Paints, also acknowledged a “slackening of demand.”

 

The senior industry officials were speaking at the Indian Paint Conference in Kolkata, organised by the Indian Paint Association (IPA). However, the industry is pinning its hopes on the upcoming Union Budget to boost demand.

 

Roy expressed hope for tax breaks, particularly for the lower middle and middle classes. “If that happens, then hopefully consumption demand will get a leg up.”

 

Jain added, “Let’s wait for the Budget and the policy initiatives.”

 

The industry is also banking on a rural-led recovery. Jain said better growth was expected from the rural market in the coming quarters, though the urban market remains slow. “At least for one or two quarters, it will remain muted. With increased recovery from rural areas, we may see a gradual recovery in the coming quarters.”

 

Roy noted that government schemes were boosting demand in the rural market. “That advantage is there. But at the same time, it constrains government spending on projects, which impacts capital expenditure and subsequently affects paint consumption to some extent.”

 

Sundaresan said extended monsoons had impacted Q3 performance. “But Q4 should be better,” he added.

 

Even as the industry faces lower demand growth, it continues to add capacity. Roy explained that this aligns with future demand expectations, which should be reasonably strong. He emphasised that the current slowdown is temporary.