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India: Furniture Sector Opportunities Soar as Demand Exceeds Supply

With its furniture market set to be worth $27 billion by 2022, exporters are waking up to India's huge potential.

Photo: Traditional Indian furniture: Set to be eclipsed by cheap, contemporary-styled Chinese imports. (Shutterstock.com/Saurav022)
Traditional Indian furniture: Set to be eclipsed by cheap, contemporary-styled Chinese imports.
Photo: Traditional Indian furniture: Set to be eclipsed by cheap, contemporary-styled Chinese imports. (Shutterstock.com/Saurav022)
Traditional Indian furniture: Set to be eclipsed by cheap, contemporary-styled Chinese imports.

At present, India is the world's 14th-largest furniture market, with the sector said to be worth some US$17.9 billion in 2015, the most recent year for which comprehensive figures are available. In the same year, a total of 10,476 importers were engaged in shipping furniture to India, with Italy, Germany, Spain, China, Korea, Malaysia, Indonesia, the Philippines and Japan the primary sources for such items.

In 2016, with 75,930 tonnes, China was the largest single source of India's imports of furniture and home furnishings. In second place was Malaysia with 13,004 tonnes, while Italy took third with 9,441 tonnes.

Overall, furniture imports from China, in particular, are seen as only likely to rise. This is largely because such items are highly-regarded by importers for their competitive pricing, which frequently even undercuts that of locally produced alternatives.

In terms of the domestic furniture manufacturing sector, there has been a degree of consolidation in recent years, with some 50 or so sizable players emerging, most notably Godrej Interio, Durian and Furniture Concepts. Despite this, the combined output of these larger businesses only accounts for about 12-15% of all domestic production in the sector, with smaller concerns and individual craftsmen contributing the remaining 85%.

While there remains some demand for such locally produced furniture, this is far outstripped by the number of consumers keen to purchase the more contemporary designs that characterise the imports in the sector. This is particularly the case among the emerging upper- and middle-class urban population, which has demonstrated a distinct penchant for branded furniture.

As a result of such demand, some $1.49 billion worth of furniture and home-furnishing items were imported in the financial year 2015-16. As a clear indicator of the rising level of imports in this sector, for the first eight months of the financial year 2016-2017, total furniture imports stood at $1.2 billion. Should this level be sustained for the whole 12 months, this would deliver a final figure of $1.8 billon, a 20% year-on-year rise.

According to current forecasts, India's residential furniture market is expected to be worth more than $27 billion by 2022, a 50% increase on its 2015 value of $18 billion. With demand set to outstrip supply, this is seen as representing a huge opportunity for furniture exporters across Southeast Asia.

Currently, demand for home furniture accounts for the bulk of furniture orders, representing 65% of all sales in the sector. Typically, customers are said to prefer high-end, low maintenance, quickly installable items.

India is also one of the largest importers of office furniture, with the country accounting for just under one-fifth of global imports in the sector. In total, office furniture accounts for 20% of the country's furniture sales, with the expansion of the sector having been driven by the country's increasing number of domestic clerical businesses, overseas-invested companies and technology parks. The growing popularity of B2B e-commerce platforms has also contributed to the rise in import levels in this sector.

Assessing the future prospect for the sector, Neha Gill, a Senior Executive with the Indian Importers Chambers of Commerce and Industry, said: "The market outlook for imported furniture is undeniably positive. Such imports are primarily coming from China, Vietnam, Indonesia, Italy and Thailand, with nearly all the items concerned arriving fully disassembled."

The majority of such items arrive in India via a number of maritime routes, with some 39% of all such imports handled by the Jawaharlal Nehru Port, just to the east of Mumbai. A further 18% is routed via New Delhi's Inland Container Depot Tughlakabad, while Bangalore's ICD Whitefield facility accounts for an additional 11%.

In a sign of faith in both the Indian furniture market and the domestic manufacturing base, Ikea, the Swedish ready-to-assemble furniture giant, has announced plans to establish the country as the global manufacturing hub for its furniture and sofas. Back in 2013, the company invested $1.6 billion in its India-based operation, after announcing plans to open 25 outlets across the country.

Mitra Dave, Mumbai Consultant

Content provided by Picture: HKTDC Research
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