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business | IST

India has potential of taking furniture exports from $2 to $20 billion, says expert

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A report by Pricewaterhouse in collaboration with IKEA shows that the furniture boom has been driven by four factors: Increasing urbanisation rates, a large share of the younger population, rising levels of disposable income and a middle class, as well as a strong tourism and hospitality industry.

As the Indian economy recovers from the impact of COVID-19, India's furniture market is looking up. The industry clocked compounded annual growth rate of 9.4 percent in the last five years, rising to $12.6 billion in financial year 2019.
A report by Pricewaterhouse in collaboration with IKEA shows that this inordinate success was driven by four factors: Increasing urbanisation rates, a large share of the younger population, rising levels of disposable income and a middle class, as well as a strong tourism and hospitality industry.
However, the report also points out that to help the industry realise its multi-fold growth potential in a post COVID world, core limitations need to be addressed urgently. It has suggested specific interventions to tackle the cost disabilities of India so that the furniture industry becomes an enabler to expand the reach of Make in India goods across the globe.
To discuss the outlook for India's furniture sector and the suggested policy interventions, CNBC-TV18 spoke to Kavitha Rao, Country Commercial Manager, IKEA India; Rudra Chatterjee, Head, FICCI Furniture Committee,; Madhusudan Lohia, Director, Merino Industries; and Anil Mathur, CEO, Godrej and Boyce.
The economy is on the mend but we have seen several changes, work from home being one, and we have seen a big lift as far in the home improvement sector. When asked about the impact of COVID on business, Rao said the last 18 months have been quite challenging for both consumers and businesses.
For the home furnishing industry, what has been the silver lining is the fact that all of us have been spending so much time home. This has meant that home furnishing has really become central to our lives. We are clearly seeing consumers realise that home furnishing can make a meaningful contribution to their everyday life at home, she said.
In the backdrop of that you're seeing some good numbers from both in terms of physical as well as online retailing, really confirming the Omnichannel growth that we have had in the market. It is a very exciting time and interesting for us to see what the post-pandemic holds in store for us, Rao said.
Mathur said the last 18 months there have been some ups and downs in the business because of the lockdown but the sentiments are very positive because the consumers have started placing more emphasis on their home, especially with respect to furniture and furnishing. They are not just looking at the functional aspects, but also at the emotional quotient.
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“We have seen a tremendous growth coming in. If I take last year, which was a pandemic year, we are about 50 percent more than last year for the corresponding period and close to about 10 percent positive over 2019-20. The best part is that the consumers have now started looking at their homes from a different angle and we are all gearing up to provide to the change in consumer behaviour, their needs, their thought processes. We are providing them with more of functional multi-usage products, products which are also taking care of their wellness and health care and also taking into account the sustainability factor,” Mathur said.
When asked about the growth potential that can be realised over the next few years and if we are seeing the formalisation of the industry, Chatterjee said the opportunity for the furniture industry is massive. India is a very small global player when it comes to furniture, but with growth in demand, and also, with a capacity bottleneck in Vietnam, reduced dependence on China, India can take the business of furniture exports from $2 billion to $20 billion. What’s needed are furniture hubs, a timber policy which allows for sustainable timber, logistics, and many changes that are being driven by the government.
“Furniture is an industry … is great for farmers because of the timber policy. Growing sustainable timber is great for employment, and it is a massive export driver. So, the potential is there, it requires formalisation in the sense that we need to move to furniture hubs, we need to be big-scale players and companies like IKEA and big international buyers would be the mainstay for this growth,” said Chatterjee.
When asked what should be the prioritised model from here on, Lohia said we have seen a growth over the last three months across the business lines which have been very good -- both domestically and in exports.
“Some of these companies which are involved in furniture manufacturing should see certain integrations take place -- integrated facilities or furniture hubs which can allow for the raw materials being very close to furniture manufacturing,” said Lohia, adding that it would help if the government promoted the rather unorganised segment of furniture manufacturing in India. More than 80 percent of India's furniture manufactured is in unorganised sector. The more it formalises we will see a virtuous cycle of a whole lot of other raw materials coming into play. Big customers like IKEA and others can also play a critical role.
For the entire show, watch the video