Indian paint industry is likely to surge from the current level of about Rs 406 billion to about Rs 620 billion by 2016 witnessing a breathtaking double-digit compound annual growth rate (CAGR) of about 20%, apex industry body Assocham said today. 

The factors that have fuelled the paint industry's growth are the rise in disposable income and education, increasing urbanization, development of the rural market and various launches of many innovative products.

"The Indian paint industry has seen a gradual shift in the preferences of people from the traditional white wash to higher quality paints like emulsions and enamel paints," said DS Rawat, secretary general Assocham.

As per the Assocham findings, the rural market has grown at a rate of around 20% a year (in financial year 2014). Increase in sales outside metros, as rural India's incremental consumption expenditure is witnessing a handsome growth.
   
The rural sector has a major share of the decorative paints segment. Thus, any benefit to the rural sector for improving the dispensable income is directly co-related to the growth of the paint industry. Besides, decorative paints are marketing savvy products backed by large advertisement campaigns and dealership networks.
   
In FY14, the paint industry stood at Rs 406 billion with per capita consumption increasing to over 4 kgs, out of which the decorative segment contributed nearly 73% at Rs 296.38 billion, while the remaining Rs 109.62 billion was contributed by the industrial segment, adds the paper.

"Demands for decorative paints arise from household paintings, architectural and other display products. The demand for paint increases during festive season like Dusherra, Diwali, Onam, Christmas /New Year, as compared to other periods," said Rawat.

The major boost to the growth in Indian paint market has been provided by the decorative paint segment, which is anticipated to grow at a CAGR of more than 18% during the period 2014-15.

The decorative paint market has been further segmented into emulsions, enamel, distemper and cement paints. Similarly, the industrial paint market is also segmented into automotive coating, high performance coating, powder coating and coil coating, adds the paper.

Some of the major reasons for the rise in the paint industry are awareness about environment and increases in disposable income are leading to demand for premium paints. The rising income levels and exposure to global trends have made consumers very aspiring and also become health conscious and using environmental friendly products, points out the Assocham paper.