PEST ANALYSIS
The pest analysis refers to four main factors:
POLITICAL
ECONOMICAL
SOCIAL
TECHNOLOGICAL
The analysis will focus towards the industry that how the political stability, rules and
regulation, and the legal system of the country affecting the overall industry. The economic
condition, liberalization, policy toward foreign investment, and growth rate of the
economy as a whole also help to analyze the overall industry attractiveness and potential
for the growth. The social aspects like people are more involved in the painting process,
trend of nuclear family; low interest rate of housing loan, increase of urbanization and
change in thinking of the people all this is helpful for the industry consideration, also the
change in technology, production process, distribution channel and more use of tinting
machine that help for better shading of color.
POLITICAL ENVIRONMENT
The analysis of the political and legal environment will consider the following aspect:
Largest Democracy.
Taxation policy i.e. reduction in excise duty and custom duty on raw material and final
products.
Fair amount of political stability.
Political consensus on economic reforms and higher target of growth of the economy.
Sound legal system * a factor contributing large foreign direct investment.
Growth in the early nineties was constrained by high excise duties. After the
rationalization of the excise duty structure in 1992 and consequent pick up in industrial
growth, the paints segment began posting increasing growth.
Over the last ten years, the industry has grown at a compounded annual growth rate
(CAGR) of 12-13% and in the next five years, it is expected to grow at a CAGR of
11-12%. The industry has apositive correlation with the countrys gross domestic product
(GDP) as both have the same growth drivers.
http://www.thefreelibrary.com/Encouraging+growth+potential+for+the+Indian+paint+indu
stry:+the…-a0206850849*
The finance minister announced that customs duty on titanium dioxide and pigments and
preparations based on titanium dioxide will be cut from the current 12.5 per cent to 10 per
cent, paint companies were among the largest beneficiaries. Titanium dioxide is a key
input in the paint industry and makes up 12-15 per cent of the total raw material costs.
http://www.business-standard.com/india/news/paint-sector-upbeatraw-material-duty-cut/27
6344/
Budget Measures
* Excise duty reduced on buses and their chassis, small cars, two wheelers and three
wheelers from 16% to 12% and on hybrid cars from 24% to 14%.
* Customs duty exemption to be withdrawn on naphtha for use in the manufacture of
polymers in order to correct price distortions and revenue losses. Naphtha for use in the
manufacture of polymers will be subjected to normal rate of 5%.
* Increased emphasis on Bharat Nirman and improving infrastructure.
