Current Trends in the Paint Industry: Intense Competition Amid Urban Slowdown
India’s leading paint manufacturers are currently facing significant challenges, including shrinking profit margins, sluggish urban demand, and fierce price competition. Despite these hurdles, companies like Asian Paints, Berger Paints, and Kansai Nerolac are cautiously optimistic about a potential recovery in the fiscal year 2026. Recent reports indicate that these firms have experienced muted growth in the previous fiscal year, prompting them to adapt to changing consumer preferences and market dynamics.
Market Dynamics and Consumer Trends
The Indian decorative paints market has seen a notable shift in consumer behavior, with many opting for more affordable options. Asian Paints, which holds over 50% of the domestic market share, reported a 5.7% decline in revenue from decorative paints in FY25, despite a 2.5% increase in volumes. This discrepancy highlights a trend of downtrading among consumers, who are increasingly drawn to budget-friendly products even within premium segments. Manish Choksi, vice-chairman of Asian Paints, noted that aggressive pricing strategies from both established competitors and new entrants have significantly impacted profitability. He emphasized that prolonged repainting and maintenance cycles, driven by subdued discretionary spending, have compounded these challenges.
Kansai Nerolac Paints echoed these sentiments in its annual report, acknowledging the resilience of the Indian paints industry amid weak demand and heightened competition. The company observed that while rural demand remained lackluster, there was a slight recovery beginning in the third quarter. Similarly, Berger Paints pointed to the lingering effects of price reductions from the previous fiscal year and softer consumer demand, which have adversely affected its standalone value growth.
Competitive Landscape and Industry Consolidation
The competitive landscape of the Indian decorative paints market has evolved significantly, with several new players entering the arena. Major companies such as Grasim (Birla Opus), JSW Paints, Pidilite (Haisha Paints), and Astral (which recently acquired Gem Paints) have intensified competition. A notable development occurred last week when JSW Paints acquired a controlling stake in Akzo Nobel India Ltd, the manufacturer of Dulux Paints, for ₹12,915 crore. This acquisition reflects the ongoing trend of consolidation within the industry, as established players seek to strengthen their market positions amid increasing competition.
The market, traditionally dominated by a few key players, is now experiencing significant churn. This shift is prompting established companies to reassess their strategies and adapt to the evolving preferences of consumers. As competition intensifies, paint manufacturers are focusing on innovation and differentiation to maintain their market share.
Outlook for FY26 and Future Growth
Despite the challenges faced in FY25, paint companies are optimistic about the future. Berger Paints expressed confidence in the decorative segment’s potential for improved performance in FY26, attributing this optimism to a rebound in urban demand. Factors such as increased disposable incomes resulting from recent tax incentives and easing inflation are expected to drive growth. Kansai Nerolac also shared a positive outlook, predicting modest growth supported by rising disposable incomes, premiumization trends, and a growing consumer preference for eco-friendly products.
Government initiatives, including the ‘Housing for All’ program and the ‘Smart Cities Mission,’ are anticipated to further bolster the market. According to an ICICI Direct report, the Indian paints and coatings market is valued at $9.6 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 9.38%, reaching $15.04 billion by 2029. This growth trajectory underscores the potential for recovery and expansion in the decorative paints sector, as companies adapt to changing market conditions and consumer preferences.
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