The Indian paint industry might witness a slowdown both in volume and value growth this year.

The volume growth is likely to shrink to eight per cent (12 per cent), while the value growth is likely to moderate to 15 per cent (22 per cent) in 2012-13.

Estimated at Rs 29,000 crore in 2011-12, the paint industry is likely to be affected by decline in demand and rising cost of production, said, Ramakanth V. Akula, President, The Indian Paint Association.

“Although the residential, commercial and retail real estate segments have significant growth potential to spur demand in the decorative paint segment, the Indian retail segment outlook during the year continues to be negative buoyed by persistent sluggish demand due to high inflation, higher construction costs and interest costs,” he said at the 49th annual general meeting here.

Auto sector

The slowdown in the automotive industry, which contributes nearly 45 per cent of the demand for industrial paints, has also affected the paint industry.

“The production of passenger vehicles in 2011-12 recorded a growth of about five per cent against 26.72 per cent during 2010-11.

“The domestic sales of passenger and commercial vehicles have also registered steady decline in growth,” said Akula.

Raw material prices

The Government’s decision to impose anti-dumping and safeguard duties on imports of raw materials such as titanium dioxide, phthalic anhydride and pentaerythritol has adversely affected the industry. Raw materials account for almost 70 per cent of the overall cost of the product.

“The rising price of solvents coupled with the exchange rate fluctuations has taken a toll on the industry,” he said.

> shobha.roy@thehindu.co.in

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