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Raw Material Issues Faced By Indian Paint Industry Creative Paints
Raw Material Issues Faced By Indian Paint Industry
The cost of paints hugely varies completely on the price of raw material. There are somewhere around 300 odd raw materials needed for the creation of paints. The raw important materials amongst raw materials of the paint industry are titanium dioxide and phthalic anhydride. These two make around 50 percent of the total cost. Titanium dioxide majorly acquires a total of 30 percent of the price. Other major raw materials are linseed, castor oil, soybean oils, and more that add up to the complete raw material price of 70 percent of the total cost. As the prices of paints are hugely dependent on raw materials and any changes in the price of raw materials will consume the margin of the paint manufacturers.
Almost 30% of the 300 raw materials depend on petroleum-based items. So, any fluctuation in the prices of crude oil will hugely change the prices of raw materials. Since the last 2-3 years, have been a lot of fluctuations in the prices of crude oil that changes the margins of the paint companies negatively. The pressure also increased because of the recession and covid19 and thereafter lower the consumption.
The need for decorative paints is fluctuating. For example, when it grows for a period, then it reduces, and just after a certain span of time, then again it improves thus looks like a recurring pattern. It seems because people usually get their spaces to whitewash when the festive season comes. You need to remember that once your space gets painted, it will need a whitewash in under 4-5 years. The demand is hugely determined by the rainy season as well. That means when there is a good rain, there is a growth in agricultural and industrial return. It has a very positive influence on disposable income which involves people and therefore an improved demand. When rain is not good, then the demand will surely see the impact especially when it comes to the decorative paints sector.
The majority of paints produced in India have a huge amount of mercury, lead, and chromium. These components are very dangerous for health and they can also cause a threat to life. Therefore there is a need for eco-safe paints. Many paint manufacturers in India are focused on creating eco-safe paints which cause even more expenses and making the availability of raw material even more difficult.
Other Factors that Hugely Affect Raw Materials in Paint Industry
Import Policies
The import policies play a major role in deciding the prices of paints as around 30% of the raw materials are mostly imported from other countries. Therefore, any kind of change in the import tax will have an effect on the cost. Also because of the exchange rate, any fluctuation in rupee-dollar prices proves to be very critical and it also needs to be consciously looked on for. For instance, If the rupee reduces against the dollar, the buyer has to take out even more money.
Supply Chain
The paint industry in India also needs increased working capital as the paint manufacturers have to purchase 300 raw materials and all from the different vendors. So, the business that has a very robust vendor, as well as a strong distribution network, will receive good benefits.
Technology Advancements
We can say that the paint industry can be a big technology-intensive industry that makes it difficult for small players to invest in the latest technologies and in the end just lose against the foreign companies. On the other hand, many large businesses have partnered with outside companies to be dominant in the market.
Industrial painting companies have a very good hold in the USA, UK, and other European countries. Also, they are trying to get a good hold in other sectors of growth in the developing economies like Sri Lanka, Pakistan, Nepal, Bangladesh, Bhutan, Myanmar, and many Arabian countries like UAE, Egypt, and more.
The Indian paint industry has a big potential of becoming a manufacturing hub of industrial and decorative paints as well. The government is trying their best to reduce unnecessary charges and also there is a decrease in excise duties, and customs duties that eventually help in the reduction in the cost of raw materials. Also, the Indian paint industry has a deep potential to become a major manufacturing hub of decorative and industrial paints.
The big Indian players in the Paint Industry have already started taking essential steps to help in retrieving the industry after covid19. The paint sector in India has seen a lot of expansion in capacity, joint ventures with other outside companies, and major investments in technology. All of this makes India a very suitable option for the foundation of paint manufacturing companies.
November 17, 2023
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