Industry Origin and Growth

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Industry origin and growth:-

The earliest paint factory in India dates back to 1902, when Shalimar Paints, Co Colour& lour& Varnish Company, A Pinchin Johnson unit, was established at Calcutta. Growing industrialization, expansion of the railways and introduction of electric power a couple of years earlier had all kept  business confidence soaring high. However, this did not provide a ready and expanding market for the nascent paint industry then. Imports from Britain continued to swarm the market and raw materials were not easy to come by. b y. The industry still consisting of one lone unit went through a rather prolonged period of infancy, till the World War II brought in dramatic opportunities. With the stoppage of imports owing to war conditions, the domestic market at last became almost the exclusive reserve of the domestic industry. European manufacturers, ma nufacturers, hitherto exporting to India, readily saw the advantages of setting up manufacturing manu facturing facilities here. The period between the wars thus saw the greatest ever influx of foreign paint p aint companies into India- Goodlass Wall (1918), Elphant Oil Mills (1917) in Bombay, and British Paints, Jenson & Nicholson and Macfarlances in Calcutta. Macfarlanes was brought over by the Poddars and became a completely Indian company, while the other oth er three: Shalimar Paints (Pinchin Johnson), British Paints and Jenson Nicholson continued as British operated units. While talking about the post independent development d evelopment of the Paint industry in India, mention must be made of Asian Paints, a completely Indian unit which started on a very small scale, grew so big and so beyond recognition over the years that it is today not only the largest unit in India  but way ahead of the second largest, Kansai (Goodlass) Nerolac Paints Ltd., formerly a unit of  Goodlass Wall (UK). Besides Asian Paints, numerous factories, wholly Indian in ownership and with rare exceptions in technology as well were set up in Calcutta, Kanpur and Bomba Bombay. y. The British units, though a few in number, were technically strong and financially sound and, with the active support and  patronage of the Government, controlled a vastly higher share of the market. The post independence period witnessed a steady stead y growth in the paint industry. From a mere Rs.200 million turnover in 1950, the paint industry crossed the Rs.14000 million mark in 1990 1990-91. -91. But even in this period, paints were considered a luxury item. Only people with high incomes were expected to decorate their houses with the use of paints. Paints, as a protective element,


were totally unheard of. The industrial segment, which was traditionally a low user of paints, visà-vis its counterparts in the decorative segment, too contributed co ntributed to this notion. In line with this misconceived notion, the government drastically increased duties on paints in the early nineties with an aim to bolster exchequer revenues. The result was obvious. This inevitably brought about a downturn in the fortunes of the industry. The products, which are highly price elastic, saw a negative growth rate of 20 % in 1991-92. The next year was also not good, registering a growth of only 2%, bringing it back to the 1990-91 level, thus thu s corroborating the fact that the industry needed lower excise levels to grow. The Th e industrial slowdown during that periodalso did not help matters. In line with the liberalized policies and the realization that paints are not necessarily a luxury item, duties were progressively reduced from 1993-94. 1993 -94. This squared growth as most companies passed on duty reductions. Further, the entry of world majors in the automobile and white goods market in India since 1993 helpe helped d the market to expand. Demand for auto paints shot up suddenly. Form a modest 8% growth rate in 1993-94,  paint demand touched 12% in 1995-96. Rapid industrialization and improvements in the infrastructure such as transport, energy and communication during the last decade gave a further fillip to the growth of the paint industry.

Aided by Government’s liberal policy of technology import, the automotive and consumer  durable segments expanded phenomenally, pheno menally, with a flurry of foreign collaboration. Increased demand for decorative, protective and functional coatings was a natural fall out, which brought, in its stride, a host of indigenous developments as well as the injection of new technology. technolog y.



Paint has been used by mankind since its origin. The evidence can be found in the cave  paintings. The Chinese are considered to be the pioneers of manufacturing paints thousands of  years ago. In modern times paint is made mad e artificially and is used in many different wa ways. ys. There are three basic things required to make paint. You need a · want·

Binder to hold the paint together ·

Pigment to get the exact color you you

Thinner so that it can be applied easily.

Types of PaintsThere are different types of paints available today. Till the 19th century the word  paint was used to describe oil-bound types only. The paints bound with glue were called distemper. For farmhouses and cottages an alternative was found and was called lime wash or  color wash. Different things need different paints. The interior of the house is painted pa inted by different type of   paint than the exterior of the house. Automobiles use different type of paint. The industrial paint is different than marine paint. Now colors are made mad e by using different ingredients for specific surfaces. For example enamel paint, when dries it becomes especially hard and usually has glossy finish. The term enamel paint today means hard surfaced paint and usually it is used in reference to  paint floor coatings of a gloss finish or spray spray paints. It can be used for concrete, stairs, porches and patios. Fast dry enamel is ideal for refrigerators, counters and other industrial finishes. Hightemp enamel may be used for engines, brakes and exhaust. Enamel is also used on wood to make it water resistant.

The Indian Paint IndustryIn India, Indian Paint industry’s in dustry’s total market size is US$1400 million. The organized sector of the industry is 55%. The 45% unorganized sector has about 2500 units. The big players and their market share-value of the organized sector are· GoodlassNerolac 15.9% · ·

Shalimar 4% ·

Architectural 70%·

Berger Paints 13.8% ·

ICI 11% ·

Asian Paints 37% ·

Jenson & Nicholson 5.7%

Others 12%The market segment is divided into two sectors.· Industrial 30%The total volume of the market is 600,000 MT. INDUSTRY ANALYSIS

Government rules and regulations 


Govt take steps to resolve paint industry crisisDecember 11, 2008 (India) Government has announced several relief measures to support the paint industry from time to time, which has been representing that paint exports have been affected b by y the global recession. Steps taken by Government to help and improve paint industry include the following:

(i) The Technology Upgradation Fund Scheme (TUFS) was launched to facilitate the modernisation and upgradation of the paint industry both in the organised and unorganized sector. The Scheme has been further fine tuned to promote the rapid investments investmen ts in the targeted sub-sectors of the paint industry. The cost of machinery has been further brought down by reducing the customs duty on imports.

(ii) To provide the paint industry with world-class facilities for setting setting up their paints units, meeting international environmental and social standards, a Public-Private Pub lic-Private Partnership (PPP)

 based Scheme known as the “Scheme for Integrated paint (SIP)” has been introduced in August 2005.

(iii) In 2004-05 Budget, the entire paint sector, except ex cept for man-made and filament yarn was  provided optional exemption from excise duty. In 2005-06 Budget, Central Value-added Tax (CENVAT) on Polyester Filament Yarn has been reduced from 24% to 16%. These modifications in fiscal levies aim at attracting more investments for modernization of textile sector.

(iv) To facilitate import of state of the art machinery to make our products internationally competitive in post quota regime, in 2005-06 Budget, the customs duty paint machinery has  been brought down to 10% except for 23 machinery appearing in List 49, which attracts Basic Customs Duty (BCD) of 15%. The concessional duty du ty of 5% continues to be at 5% on most of the machinery items.

(v) Government has launched the Debt Restructuring Scheme w.e.f. Sept., 2003 with the  principal objective to permit banks to lend to the paint sector at 8-9% rate of interest. (vi) Government has allowed 100% Foreign Direct Investment in the paint sector under automatic



(vii) Government has de-reserved the readymade garments, hosiery and knitwear from SSI sector  so that large-scale investments may be encouraged in these sectors.

(viii) National Institute of Fashion Technology (NIFT) has been set up to provide the leadership role in sensitizing the Industry to the concept of value addition by inducting ind ucting trained professionals to manage the industry. This has resulted in an increased demand for trained professionals in various sectors servicing the industry.

(ix) A series of relief measures to paint exporters such as enhanced enhan ced DEPB & Duty drawback  rates, reduced ECGC premium, subvention on o n credit rates, refund of service tax paid b by y exporters on various services etc.;

(x) Apparel Export Promotion Council (AEPC) has established Apparel Training Design Centres (ATDCs) throughout the country to cope with the requirement of skilled / semi-skilled manpower for for the paint industry.

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