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 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 d�cor-consciousness 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.

What makes India's market unique?

The Indian market is in many ways different from other markets. Some features unique to the Indian markets include the following.

India has a large number of paint shops or outlets, more than 50,000. Unlike in most of the developed world, there is a large number of small paint and hardware shops that cater to the local population. There are no company owned outlets or large retail formats for the DIYer. However this is beginning to change as some have been in operation as of 2007.

The distribution policy of Indian paint companies to directly cater to most of these more than 25,000 shops is unlike other industries where companies operate through distributors. Each company has a large number of depots to service these outlets and a large sales force for this purpose.

A large number of shops have automated/manual dealer tinting systems. There are more than 20,000 in operation, probably the highest for any country. In contrast, there are only approximately 7,000 tinting systems in China for a market two and half times India's size.

The high volumes of low cost distempers sold in India, which amounts to approximately 200,000 tons per annum at an average cost of Rs35 per kg ($0.88) at the present rate. This is significantly lower priced than anything sold elsewhere in the world.

The high percentage of solvent-based alkyd enamels sold in India. These have been largely replaced by water-based systems across the developed world.

Lastly, the absence of the DIY market, which constitutes between 25-50% of the decorative markets in the West, is not present in India. Indians depend on the skilled painter largely on account of lower labor costs, greater necessary surface preparation and an inherent laziness among the Indian consumer when it comes to painting. Hence the range of products sold and the manner in which they are sold and used are very different in India.

Decorative trends

Over the last few years, there have been a significant number of new trends in the decorative coatings market.

Premium products have seen significant growth and has been much higher than economy products. The sale of premium and luxury emulsions, high-end exterior finishes and wood finishes like polyesters and polyurethanes reflect a change in usage patterns of Indian customers who are willing to spend more on superior products. This phenomenon is seen across markets, in larger cities as well as smaller towns. There is a continuous demand from consumers for newer and better products. Although a major part of the market continues to be highly price-sensitive.

There has been a higher growth of emulsion paints for interiors vis-�-vis distempers. There is an increasing use of economy emulsion in place of lower priced distempers. Continuously looking for better products, more and more consumers are switching to marginally higher-priced emulsions where they get more durable and better-looking finishes in a wider range of colors.

India's market has also seen a higher growth of exterior emulsions. Over the last ten years, exterior emulsions have gradually replaced cement paints largely on account of longer life, better looks and ease of usage. This trend is expected to continue with economy exterior emulsions replacing cement paints. The higher-grade cement paints have been largely replaced by emulsions and it is but a matter of time before cement paints on the exteriors cease to be an easily accepted option. Increased advertising by all leading paint companies has educated consumers and made them aware of better exterior products.

The higher growth of dark shades vis-�-vis whites and pastels is� a sign of changing d�cor styles and a willingness to experiment fuelled by examples shown by Bollywood-India's Film Industry-and television serials. This is coupled with easy availability of dark/accent shades, which has in turn increased the usage of dark shades in homes and commercial establishments across India.

The increased involvement of the consumer in home d�cor has fuelled the growth of bright and dark shades as one-wall themes or borders. Consumers today are not just open to change but look for change and search for options or themes which differ from past experiences.

Painting and d�cor services are on the rise also. In 1999, Asian Paints in India launched a paint service called Home Solutions based on consumer research, which gave homeowners across many Indian cities the option of having their homes painted by Asian Paints. Although out-sourced, the company supervised and took full responsibility for the service delivered. The company promised to deliver quality service in a fixed time frame and the painting was given a one-year warranty. Today a few other paint companies have launched similar services.

Theme walls have also become a popular element of the Indian decorative coatings market. Led by Kid's World and Wall Fashions from Asian Paints and Disney from Kansai Nerolac, more consumers are looking at painting as a d�cor item in itself and are willing to spend a little more to get something extra.

Special effects continue to gain in popularity too. Today many paint companies are offering effect finishes. Products from Jotun, Oikos, ICI's Duette and Inspira, Kansai's Impressions, Berger's Illusions and Asian Paints' Royale Play provide the consumer many more options than simply painting his wall with a simple color. Today there are a wide range of options from metallic to stucco, ragging and combing which provide consumers newer finishes and effects for their homes.

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. Paint marketers have to continually meet the needs of the changing Indian consumer and regularly provide him with newer products and services to meet his requirements.