Paints have a remarkable contribution in real estate and automobile divisions. Ever Since GST implementation, the contribution has slowed down. It looks like the GST rate on paints has burdened this industry. The market for paints contributes largely to the GDP in India and is relied upon to contribute to 1.5 times to 2 times GDP consecutively since last five years.
If we evaluate the Market size of the Paint industry in India, it is around Rs 350 billion. Anticipations are made by the industry players that in the coming times 12% of the business development is probable.
One can’t say that the overall development of the country would affect the paint industry or not, but looking at the standards of the housing development, and a tremendous increase in infrastructure, the contribution of this sector is going to be remarkable and would increase on yearly basis.
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Though the Housing sector relies remarkably on the Paint industries but, there is another sector which requires the contribution of the Paint sector and that is the Automobile industry. This is evident by the cars coming in various colour variants and which has been liked by the customers largely. Thus one could see a defined growth in the paint industry with various industries relying upon it.
GST Rate on Paints and its Impact on industry
The GST rates have been reduced to 18 per cent, from 28 per cent which is a straight cut of 10 per cent as reported in the 28th GST council meeting.
The rate reduction has led to a higher projection in sales. The growth is about 10 to 15 per cent in the fiscal year of 2018-19 which is higher as compared to the previous year’s growth of 9 per cent.
Vice president of Indian Paint Association stated that “We expect 10-15% growth in sales in this fiscal, [in] the decorative paints segment. We have urged members to lower the MRP. The lowering of the rate is likely to boost [sales].”
However, due to the increase in the price of crude oil, the price of the raw materials used in paint manufacture, went up twice the year and thus issues were created.
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Even the Kotak securities voiced that the paint industry is directed to earn 10 to 15 per cent more than the previous fiscal year on the account of rate reduction. As per many of the international research agencies, the time has come to avail higher profits by higher sales taking the benefit of the huge Rate reduction.