Festival Season Sparks Revival in India's Paint Industry

The $10.46 billion paint and coatings market, reeling from a 2% revenue drop in FY25, the first in two decades is banking on the festival season for a turnaround. Urban demand faltered due to high interest rates and a sluggish real estate market, while early monsoons in June dampened Q1 FY26 earnings, with major players reporting flat growth amid price wars from new entrants. Rural demand, though steady, couldn't offset the urban slump, leading to a projected 4-5% volume growth for FY26.

However, festive quarters could see 12-15% spikes, driven by pent-up demand from delayed monsoon projects and improved consumer sentiment, bolstered by a recent 5% GST cut on paints to 18%.

Festive season typically drive 30-35% of annual paint sales, as households refresh homes to mark prosperity. An earlier Diwali this year shortens the buying window but heightens urgency, with industry forecasts pointing to double-digit volume growth during the festive period. The extended monsoon delayed repainting projects, creating a backlog that companies expect to clear, supported by stable inflation at 4.5% and steady RBI rates easing financial pressures.

Leading companies are rolling out aggressive campaigns to seize this opportunity. The market leader, with a 55% share, is pushing premium textured and eco-friendly paints, which offer 20-30% higher margins. Its premium range, targeting urban aspirational buyers, saw a 15% festive uptick last year and is backed by a Rs 500-crore marketing push, blending digital ads with on-ground painter partnerships. Another major player, holding 20% of the market, is focusing on rural outreach, deploying 5,000 mobile vans for live demos during Ganesh Chaturthi in Maharashtra to capture semi-urban demand.

Newer entrants are also stepping up. One campaign ties emotional storytelling to festive repaints, portraying the joy of freshly painted homes during Ganpati celebrations to build brand loyalty. Another player is sharpening its focus on connected TV ads and regional activations, particularly for Durga Puja in Bengal, aiming to tap into the festive buying frenzy despite the compressed season. These strategies reflect a broader industry shift toward personalised marketing to stand out in a competitive landscape.

Economic tailwinds are aiding the rebound. The government’s Rs 11-lakh crore infrastructure capex in Budget 2025 signals robust long-term demand from real estate and automotive sectors. The paint market is projected to grow at an 8.4% CAGR, reaching $14.27 billion by 2030, with exports gaining traction under 'Make in India' initiatives. The GST reduction is particularly boosting affordability in semi-urban markets, where price sensitivity drives decisions.

Yet, challenges persist. The unorganised sector, holding 40% of the market, fuels price volatility, with economy paints seeing 5-7% price cuts recently. Urban demand in metros like Mumbai and Delhi remains soft due to high base effects, and aggressive discounting by new players risks eroding margins. However, a shift toward premium products during festivals could restore profitability to 15-16% for top firms, analysts suggest.

With festive demand driving volumes and premiumisation boosting margins, FY26 could mark a colourful comeback for a sector eager to brush off its recent woes. If the season delivers, the industry’s canvas may reflect renewed growth, setting a positive tone for the year ahead.