A reduction in tax rates and policies to boost consumption seem to be the two most important expectations of the paint industry from the Union Budget.
Companies are also looking at a reduction in duty on titanium dioxide (TiO2), a key raw material for the sector.
Post GST rollout, the sector has seen a tax incidence of 28 per cent, which it believes to be on the higher side. However, industry captains are holding out hope that either the Budget or the GST Council will bring down the rate to a more feasible 18 per cent.
“Ideally, paints should be put in the 18 per cent bracket. It will help increase consumption with companies passing on the cost benefits to consumers,” said Abhijit Roy, MD and CEO of Berger Paints and President of the Indian Paint Association.
KBS Anand, MD of Asian Paints, also said the industry will welcome reduced taxation.
Increasing consumption
Jayakumar Krishnaswamy, MD of AkzoNobel India, pointed out that the repainting cycle in India is already coming down from 7-10 years earlier to 5-7 years. Ideally, it should be 3-5 years.
“In such a case, a lower tax rate facilitates consumption. I believe paint should come within the category of items like ceramics and electricals,” he added.
Krishnaswamy also batted for sops to consumers and builders of affordable housing. “I believe that the private investment cycle should pick up soon and government spending on infrastructure should help push up the industrial paints segment too,” he said.
Paint makers are also looking forward to a duty cut on TiO2 imports. According to Berger’s Roy, nearly 85 per cent of the TiO2 requirements are imported.
It may be recalled that the price of TiO2 has been rising since the start of 2017. In the wake of surging raw material costs, paint firms resorted to consecutive price hikes, aggregating to over 5 per cent in March and May last year.