Budget 2020 expectations: What paint sector is expecting from Union Budget 2020

By Minal Srivastava

Union Budget 2020 India: The Indian paint sector has been growing steadily over the past few years. Growing at a CAGR of 15%, the country’s organised paints industry is expected to cross Rs 50,000 crore in value by 2020. As of 2018, the sector contributed 0.4% of GDP, besides creating significant employment in the organized and unorganized sectors.

As further growth opportunities are unlocked for the sector, it will be able to contribute to the economy in a larger way. This is why we leading players of the sector are waiting with bated breath for the upcoming Union Budget which will be announced by Finance Minister Nirmala Sitharaman on 1st February 2020. At this juncture, here’s looking at the key expectations of the paint industry from this year’s Union Budget:

Further reduction of GST:

In July 2018, the government reduced the Goods and Services Tax (GST) on paints from 28% to 18%. This had a positive impact on demand, the effects of which are still present today. A further reduction in GST will definitely be a positive step for the paint industry. However, this is a secondary area of focus for manufacturers, as an increase in customer sentiment is the most pivotal aspect for the industry right now.

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Rationalizing indirect taxes:

The demand for decorative paints will rise if the middle-class consumer experiences an increase in its disposable income. Therefore, the paint industry is looking forward to the rationalization of indirect taxes which will give consumers significant financial relief. As a result, the paint industry will witness a rising demand and players will be able to maximize sales and profits.

The focus on affordable housing:

Further, the paint industry has benefitted significantly from the government’s recent focus on providing affordable housing to Indian homebuyers. The Union Budget 2020 is an opportunity to further make homebuying a lucrative opportunity for consumers. This can be done through a cut in personal taxes and an increase in the INR 2 lakh tax rebate that is currently offered on home loans. The government has committed itself to the goal of Housing for All by 2022, and this will stoke the demand for paint products in a major way.

Incentivizing consumers:

Since consumer sentiment is the main area of focus for paint manufacturers, the industry is looking forward to the government incentivizing consumers through tax breaks or other methods. As consumer sentiment continues to rise, it will have a multiplier effect on the paint industry and the Indian economy at large.

It is evident that the paint sector is seeking measures to boost demand through this year’s Union Budget. Increased spending on the infrastructure sector, a rise in disposable income for middle-income consumers and further corporate/direct tax reduction will all contribute towards a brighter future for India’s ever-growing paint industry.

(Writer is Minal Srivastava, Vice President Growth, Strategy & Marketing, Shalimar Paints. Views expressed are personal)