More and more paint businesses are entering the construction chemicals segment in India in 2023

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The Indian construction industry has witnessed a significant transformation with the emergence of new players in the market. Higher government spending on infrastructure and the affordable housing sector has not only driven the growth of the construction industry but is also aiding the growth of other related segments, including construction chemicals. As a result, more and more players, including paint businesses, are entering the construction chemicals market in India.

• In March 2023, Indigo Paints, one of the leading paint companies in India, announced its foray into the waterproofing and construction chemicals segment. The company aims to provide high-quality solutions for the construction industry by leveraging its existing expertise and infrastructure in the paint business.
• Nippon Paint, another leading paint company in India, also entered the construction chemicals market in March 2023. With an investment of INR 125 billion in the segment, the firm is expected to launch several innovative products in the construction chemicals sector.

The entry of paint businesses into the construction chemicals segment can be attributed to several factors. Firstly, the construction chemicals market in India is growing rapidly, driven by the increasing demand for infrastructure projects and the adoption of modern construction techniques. Secondly, the construction chemicals segment offers higher margins compared to the paint business. Paint companies can leverage their existing distribution networks and brand equity to enter the construction chemicals market, which can result in cost savings and increased profitability.

Furthermore, the construction chemicals segment is highly fragmented. A number of small and medium-sized players are operating in the sector. The entry of large paint companies with established brands and distribution networks can help consolidate the market and create economies of scale, aiding the overall industry growth from the short to medium-term perspective.

The entry of Nippon Paint and Indigo Paints will further drive the competitive landscape in the construction chemicals space. The success of these paint companies in the construction chemicals segment will depend on their ability to differentiate themselves through product quality, innovation, and customer service. Furthermore, to build a strong presence in the newly entered market, these paint businesses have also adopted differentiated strategic measures.

• Indigo Paints, on one hand, is planning to increase its presence in the Indian market by expanding its sales force by 40%. Over the next 12 months, Indigo Paints is also seeking to expand its presence in Tier I and II cities, where it is still largely underpenetrated having focused mostly on Tier III and IV cities of India in the past. Nippon Paints, on the other hand, has announced that it will boost its dealer touch points by 50% to expand its reach among consumers.

With the entry of these new players in the segment, ConsTrack360 also expects investment from existing players to increase in the sector over the next three to four years. To innovate and develop high-quality products and retain their market share, players will have to boost their research and development investment from the short to medium-term perspective.

While innovation is projected to grow in the market, there is also a risk of a price war due to increased competition in the construction chemicals space. With the entry of new players, existing players may need to lower their prices to remain competitive, which can impact their profitability.

Overall, the entry of these new players into the construction chemicals segment in India is a significant development that highlights the growing demand for construction chemicals in the country. Paint companies can leverage their existing brand equity, distribution networks, and infrastructure to enter the market, but success will depend on their ability to develop innovative and sustainable solutions for the construction industry. As the market continues to grow, ConsTrack360 expects more paint companies to enter the construction chemicals segment in 2023.