The recovery of the Indian economy from the pandemic has been a blessing for the furniture industry as it has shown outstanding results. The Indian domestic furniture market is expected to grow at a Compounded Annual Growth Rate of 12.9 percent during the period of 2020-2024. The global furniture market is valued at $ 1.1 trillion, of which the Indian market size is less than 5%.
The growth was driven by good numbers from both in terms of physical as well as online retailing, confirming the Omni-channel growth through website like pepperfry.com and urban ladder that is present in the market. The success was driven by four factors which are increasing urbanization rates, a large share of the younger population, rising levels of disposable income of middle class, strong tourism and hospitality industry and people adapting to the work from home. Due to certain condition in the global trade of furniture India has become a key contender which can rise to take a good share in global furniture exports.
The opportunity is created due to rising demand globally, capacity bottleneck in Vietnam, and reduced dependence on China. Indian furniture industry can take advantage of this opportunity if the core limitations haunting its growth are being addressed immediately
Need for integrated and cluster based furniture hubs – The government has expressed a clear intent of growing indigenous capability in the furniture sector by putting curbs on furniture imports. Exporters have been interested in enhancing their production capabilities by opening up manufacturing bases in identified regions, these furniture hubs should be close to regions where the raw material is processed.
The furniture industry in India is dominated by micro and small units, more than 80 percent of India’s furniture is manufactured by the unorganized sector, it is key for these micro and small companies to maximize their potential and contribute to the growth of the sector. Cluster-based development would help synergize their existing resources and provide these actors with the opportunity to acquire technology, gain access to capital, upgrade skills, promote indigenous design and MSME units to fill large orders or meet the needs of the international buyers.
Timber policy that allows sustainable timber - Sustainable timber refers to timber that has been responsibly harvested, meaning that when one tree is cut down for use, another is planted to replace it. This will not only help grow employment, but help Indian furniture industry to be less dependent on foreign imports for timber.
Need to Understand the Global Value Chain of the furniture industry and strategically market Indian furniture – The Indian Furniture Exporter need to understand the global value chain of the furniture industry. The dominating players are China, Germany, Poland and Italy. China in recent years is losing to emerging countries like Vietnam and Poland when it comes to growth in exports as it now faces more unfavorable macroeconomic circumstances such as rising cost, decreasing international demand, technology gap and rising trade barriers. Germany, Poland and Italy have created a niche space for themselves where it’s extremely difficult for other countries to beat them in terms of quality.
The idea here is for Indian furniture exporters to understand the value chain properly and make efforts to move up the value chain by shifting focus to promoting and producing competitive product, they should try to produce what the Indian furniture industry is good at and at the cheapest price so that people are ready to buy and the product is competitive all over the world. In addition, the focus should now be on exporting more finished goods rather than raw materials to counter many tariff and non-tariff barriers.
This sunrise sector alone has the potential to boost exports of more than US $ 50 billion. If we take furniture exports, India has abundant raw materials, labor, skills, etc. and the potential for competitive prices on a global scale. The government is subsidizing to support many uncompetitive sectors for long, which is proving to be counterproductive. Take China for example: the focus on new sectors has paid off big for them. China's furniture exports alone amount to $ 350 billion. India should take a similar approach to futuristic sectors and the furniture sector certainly deserves attention in this regard.