While companies in mature markets face the
challenge of even maintaining sales throughout the
ongoing financial crisis, continued economic growth
in India is likely to lead to an additional million
tonnes of coatings demand by 2013, when the total
Indian paint market will be in the region of 2.7m t.
That is among the key findings of paint and coatings
consultancy firm IRL's latest study, A profile of the
Indian paint industry, 4th edition.
Such figures should hardly come as a surprise.
The country has a young and booming population,
which, unlike China, is geared towards large families.
Census data show that India has a relatively young
population, of which half is under 25 and 40% under
18, boding well for both current and future demand.
What’s more, India is in the midst of a massive
state investment programme that will construct,
renew and upgrade infrastructure and architecture
on a scale not seen before. Thus a long history of
neglected structures prone to collapse through lack
of protection at last looks as if it might begin to be
corrected, as the benefits of coatings finally start to
be appreciated.
Investors open doors
Then there is the industry perspective. India has
been winning industry investment like never before,
finding itself the latest destination for investment
after successive waves have homed in on Southeast
Asia, Mexico, Eastern Europe and China. The perfect
example is the automotive component sector, which
at some point in the future will create an enormous
market for coatings for plastics in India. It has seen
investment more than double between 2003/4
and 2007/8, while turnover and exports have both
tripled. Clearly, India is much more than a base from which to serve mature markets. To this end, the fact
that car ownership in India stands at just about 1%
provides the biggest clue of all to the potential for
consumerism.
The Indian paint and coatings industry is
changing only slowly with time. For a long time the
status quo seemed to be totally unshakeable as a
combination of Asian Paints, Goodlass Nerolac, ICI
India, Berger Paints India, Jenson & Nicholson and
Shalimar Paints seemed to dominate the market as
the top six producers. The effects of time and industry
upon this line-up have seen Jenson & Nicholson all
but disappear, Kansai Paint take a majority stake in
Goodlass Nerolac and AkzoNobel move to control
ICI’s stake in its Indian joint venture operations.
As such, foreign paint companies have found
little opportunity for exports in the Indian paint
market – exports of paint to India have always
been exceptionally low, usually accounting for 1%
of the market. Instead, the indirect role that foreign
paint makers have had in targeting India from the
outside has usually taken the route of technology
licensing, especially in the industrial coatings sector,
where specialist coating technologies otherwise not
available come into their own. With the exception of
the special-case of ICI, all of the other top-tier players
have pursued technology from overseas. However,
some medium, small and even nascent producers
of coatings have managed the same. Table 1
summarises a few selected examples of technology
licences that support the Indian coatings industry.
Switching on to growth
Over the last few years, though, things have
started to change more rapidly as paint companies
have become increasingly switched on to the
growth markets of China, and in its shadow, India.
Comparatively recent entrants into the Indian
paint market were previously testing the sector
by exporting from the Middle East, in the case of
Jotun, or Southeast Asia, as seen with Nippon Paint.
Sherwin-Williams also boldly re-entered the market in 2007, by acquiring Nitco Paints, thereby giving it
leverage for entry into the market with its own paint
stores in the Bangalore region.
A golden key
Years ago this idea would have been unthinkable,
because across the top tier of the decorative
market, distribution was the major hurdle that any
new entrants would have to overcome. Luckily, the
regional nature of the paint market in India has
afforded new entrants a golden key with which to
enter, allowing them to test the market with select,
high-quality paint ranges, targeted at a wealthier
demographic. The route to the market in these cases
has been through the control of the paint makers’
own stores, as seen with Nippon Paint and Sherwin-Williams. Jotun’s different path has seen it join up
with the retailer Lifestyle International in order to
showcase its high-quality finishes on in-store room
sets. This is a significant departure from the small
paint shops found in India, which are crammed with
competing paint brands in a store that can barely
hold two or three people.
The entry of overseas decorative paint companies
into the Indian market has had only minimal impact
so far. But it also represents a time when new and
different ideas are being brought to the market from
industry outsiders. Although nothing beats a history of local knowledge for entry into a new market,
these companies arrive in India armed with a wealth
of knowledge, staggering budgets and often better
standards and technologies, so sooner or later they
will emerge as more serious competition.|
It is the sheer size of the decorative paint market
and its potential that reigns supreme and generates
the most interest in India. Indeed, India has the
highest percentage of decorative paint use of any
country in the world. At 79% of the nation’s coatings
demand, this is already a 1.3m t market; by 2013 a
further 900,000 t of decorative paints stand to be
used, driven by the aforementioned government
investment in the construction of housing and
apartment blocks to civil and tourist amenities.
There is enormous potential in India, even in such
unlikely ideas as the development of skiing resorts in
the Himalayas!
The flip side of that highly predominant decorative
paint demand is a comparatively small industrial
coatings sector, which amounted to about 340,000
t in 2008. This will be abundant with opportunity
in the future, largely as a result of growing
awareness of the benefits of compliant coatings
technologies. Powder coatings offer the perfect
example; a long-held technology that has seen
spectacular growth in India, going through many
phases of use from architecture to fridges and fans and now into significantly different areas, such as
telecommunications towers. The hurdles for powder
coatings are the initial investments and development
of the finishing process itself. However, the efficiency
of the process and the complete absence of VOCs
have woken up many in the industry to the benefits
of clean technologies.
Legislation is still far from being a driver for
cleaner technologies in India, although on the
international front, highly regulated and globalised
segments, such as the marine paints market, will
almost certainly be using compliant technologies in
the future. The potential of the Indian marine paint
market is something to consider for the next decade,
as ports continue to develop. India has an eye on
entering the shipbuilding sector on a scale that could
upset the Far Eastern applecart.
However, it is in land-based, rather than seabased,
transport that the greatest changes stand
to be made. Despite the rising Japanese influence
in India, especially behind the automotive and
automotive coatings sectors, there is still some way
to go before there is widespread use of water-based
finishing in the sector.
Igniting demand
Although vehicle launches in India are quite
frequent, none have created quite the buzz that
the Tata Nano has generated. With the sacrifice of
many modern design features, the Nano has been
conceived to be the world’s cheapest production
car. It stands as a testimony to Indian engineering,
and holds enormous potential in India, where it is
claimed that it could expand the vehicle market
by up to 65%. This can only be good news for the
home-grown automotive components, OEM finishes
and refinishing segments, especially owing to the
regrettable state of many roads in India. What
is going to be even more significant is the arrival
of the Nano in Europe, especially at a time when
economy is high on the agenda and the trend in
car sizes is downwards. The level of its progress in
conquering these more competitive markets will be
a true barometer of just how popular Tata’s Nanotechnology
really is.
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