The Indian paints industry, once considered a recession-proof sector, is experiencing a demand slowdown in urban markets. Sluggish housing sales, muted consumer sentiment, and aggressive price wars have dampened growth for leading players including Asian Paints, Berger, and Kansai Nerolac.
Urban struggles
Urban housing markets, traditionally the largest demand driver for paints, have slowed due to delayed construction activity and reduced discretionary spending among consumers. Industry insiders report that repainting cycles have lengthened, with homeowners postponing upgrades amid higher living costs.
“The urban slowdown is real. Consumers are spending cautiously, and many large housing projects have been delayed. This has directly impacted decorative paint demand,” said an analyst tracking the sector.
Price wars dent margins
Adding to the pressure is intense competition, with new entrants such as JSW Paints and Birla Opus pushing aggressive pricing strategies. This has sparked a price war, forcing incumbents to offer deeper dealer discounts and consumer promotions. While competition has benefitted consumers with more choices and better deals, it has significantly eroded industry profit margins.
Rural demand holds firm
In contrast, rural and semi-urban markets have shown relative resilience. Government-led housing and infrastructure programs, combined with festive season spending, have supported demand. Smaller cities continue to see stronger growth in repainting activity, providing a cushion for the industry.
The FY26 hope
Despite the challenges, paint companies are optimistic about a revival in FY26 (2025-26). Factors such as easing inflation, an expected rebound in housing demand, and continued government investment in urban infrastructure are likely to support recovery. Analysts forecast that the sector could return to double-digit growth once macroeconomic conditions stabilize.
Shift toward premium and sustainable paints
Another trend that could aid recovery is the growing consumer preference for premium and eco-friendly paints. Brands are increasingly launching water-based, low-VOC, and specialty coatings targeted at health-conscious and environmentally aware consumers. This segment, though currently small, is expanding rapidly and offers higher margins than mass-market paints.
Industry outlook
In the short term, companies may continue to struggle with squeezed profitability. However, the long-term fundamentals of the Indian paints sector remain strong, supported by urbanization, rising disposable incomes, and increasing aspirations for better housing aesthetics.
For now, the industry is in a consolidation phase. The combination of urban slowdown and intensified competition has created short-term headwinds, but most players remain confident of a rebound by FY26, with new technologies, sustainability, and premiumization likely to drive the next phase of growth.