Paints

Highlights

• Removal of the 10 per cent surcharge on custom duty thereby reducing custom duty from 38.5% to 35%.

Budget Impact
Excise		Customs		Policy Tax

The removal of the 10% surcharge on custom duty will lead to a decline in the effective duty on imports of raw material costs of paint companies. Raw material costs account for as high as 60 per cent of the total cost.

Outlook
The industry is demarcated into decorative and industrial paints in the ratio 70:30. This is against an international average of 30:70 in favour of industrial paints.

The main demand drivers for the decorative paints segment is housing and construction activity. Sops given to the housing sector is likely to boost demand in the paints industry. For the industrial segment it is primarily the automobile segment. Increasing competition from car manufacturers will adversely impact paint companies.

Overall recovery in the economy and the strong growth in the housing loan disbursement will give a boost to the industry. Imports from China, however, pose a big threat for the industry.