Furniture industry deserves a second look due to changing circumstances. This may be one of the few industries where COVID-19 breakout may act as a gamechanger for the industry. Also, this is one of the sectors highlighted by the government under ‘Aatm Nirbhar Bharat.’
Furniture cluster to be developed
Under the ‘Atmanirbhar Bharat Mission’, the government is working to develop a furniture cluster near a port where common facilities for testing, research, design and packaging can be provided. Such a cluster would help furniture manufacturing on a large scale to meet domestic requirements and push India into the global furniture trade market.
Increased restrictions on imports
The government is also planning to tighten the restrictions for the import of furniture into the country as part of its Aatmnirbharata (self-reliance) policy. This move will not only save foreign currency but also will boost the domestic industry and generate employment as furniture and wood panel industry are labour intensive. According to available data, India’s annual imports of wood and allied products amounted to Rs 15,000-20,000 crore while furniture or wood panel are not technology intensive products.
Licencing for imports may become mandatory
It’s also expected that the government may make licencing mandatory for importing furniture as a measure to reduce imports and encourage domestic production. India has already imposed licensing requirements for tyres and colour TV imports, a big percentage of which comes from China. The government is opting for licencing route to check imports. The licence requirements serve as non-tariff barriers that discourage imports. Cheap imported goods have been finding their way into the country through the misuse of free trade agreement route.
Making own furniture is still prevalent
In India, especially in rural India and tier IV towns practice of calling carpenters home to make furniture is still there despite the emergence of many furniture making brands in last few years. People prefer ‘made to order’ furniture as they believe such furniture last longer. Easy availability of carpenters is also contributing to this trend to an extent. Even in cities this trend is there but preference is slowly shifting towards ready to use furniture because of the presence of many furniture brands like IKEA.
COVID-19 breakout is an opportunity
Breakout of COVID-19 has disrupted the entire economy but the furniture makers are seeing an opportunity emerging in post-COVID-19 as the trend then would be towards readymade furniture than call the carpenters home to make furniture. Post-COVID-19 people would be wary of calling carpenters home because of social distancing and this practice may continue at least till the threat of virus exists.
Anti-Chinese sentiment to help industry
The size of the organised furniture market in India is about Rs 25,000 crore, while the overall furniture market size in India is about Rs2 trillion. Furniture imports from China into India are currently estimated at US$2 billion. With anti-Chinese sentiment prevailing in the country now, the wood panel industry and the furniture makers in India expect a big opportunity for Indian modular furniture makers in replacing these Chinese imports over medium to long term. According to them, there is likelihood of an increasing acceptance of ready-made furniture or modular furniture in India which would also drive higher demand.
India not a dominant player in global furniture trade
Global trade in furniture is about Rs 20 trillion and India is not a key player in this segment despite having cheap labour in abundance. Meanwhile, the government is working on the possibility of importing wood in India without any duty, which would help solve the issue of availability of raw material and boost the domestic furniture manufacturing industry.
Growth in Indian furniture market is driven by various factors such as rising trend for modular and state of the art furniture among the population living in urban cities, growing urbanization in Indian states, rising demand for durable and hybrid seating furniture. Moreover, the rising growth of wood industry, especially that of Medium Density Fibreboard (MDF), in India in recent years has helped the furniture industry by keeping material cost under check. Further, the rising trend of online and mobile shopping in India is envisioned to bolster the demand for furniture through online channels. Various furniture companies such as Pepperfry, Urban ladder and others are creating huge demand from these online channels. Apart from this, the demand for low cost plastic furniture is also increasing in commercial sector. Entry of several foreign brands like IKEA is also helping the expansion of the market. Thus, Indian furniture market, though presently fragmented and scattered, is in for good times in the coming years, thanks to changing times and also due to better policy environment.