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India today is a rapidly growing consumer market, with fast transitioning tastes and preferences that are driving businesses in the country. The furniture sector lies at centre of these developments, transforming from a sector historically dominated by small and medium scale craftsmen to one now overseeing the fast expansion of industrial manufacturing. As the inherent advantages of the country in this key consumer segment continue to further shape the sector’s potential, the opportunities here are quickly giving rise to newer businesses, brands and retailers, that aim to bring the furniture revolution to the doorstep of the Indian consumers.   

Despite production in the sector traditionally being fragmented, the rising demand is thus expanding the scope for this industry. Over the next years, the domestic furniture market is expected to grow faster than the global average, reaching $ 37 Bn by 2026 and up from only $ 17 Bn in FY 2021. This is a result of the multi-faceted economic growth faced in the sector, led by rising urbanization which now encompasses 35% of population, increased residential spaces with household sales growing by roughly 36% this past year, rising number of nuclear families, as well as increased spending prowess of segments of the society. Younger buyers with shifting tastes are creating a market for more modern, functional, and versatile modular designs. Moreover, the popularity of traditional handicraft-design blended furniture with modern functionalities is also creating a unique line of options that preserves the Indian-ness of the domestic furniture market.   

And while these strengths had existed for a while, the recent years, and especially the period since the Covid-19 pandemic has been truly transformative, with digitization and e-commerce becoming the key growth drivers of the sector going forward. D2C sales are expected to grow at a CAGR (compounded annual growth rate) of 36% to reach $ 17 Bn by 2030. Retailer websites with VR and 360-degree integration are fast-becoming the first stop for perspective consumers. These have also made the market far more accessible and have considerably reduced the barriers of entry for newer upstarts and brands as well. Urbanization and increased internet penetration meanwhile, have also induced the focus on attaining “last mile delivery” by expanding the sector’s reach into the Tier II and Tier III cities through inventory and logistics upgradation. Driven by these developments, the furniture rental market has seen a major upswing, now occupying roughly 3% of the market share and expected to drastically increase by 26% CAGR between 2020 and 2025. With the consumers being increasingly cost-sensitive, offices shifting to a hybrid model that prompt further short-term furniture leasing, as well as savvier designs and innovations inducing more frequent upgradation, the rental-mode has increasingly become the primary mode of ownership for many first-time buyers.  

Driven by these demand alterations, suppliers and manufacturers in India are increasingly building their scale to grasp the opportunity at offer. This is aided by the policy push provided by both the state and the central level Governments to promote the holistic development of the furniture manufacturing ecosystem. Furniture parks and clusters are being established throughout the country, aiming to enhance the capacity and scale of MSME producers through the reduction in logistic and supply chain costs as well. Furthermore, many states have identified Furniture as a key thrust sector, providing generous subsidies and incentives on capital expenditure, interest payment, stamp duty, electricity cost as well as GST, to drastically reduce the cost of investment. The increase in the effective duty on furniture imports has been raised to 25% in recent years, in a strong push to promote domestic manufacturing and indigenization. Along with this, the government has particularly emphasised the quality enhancement of raw material and finished products to match global levels, by enacting a Quality Control Order (QCO) for resin-treated compressed wood laminates earlier this year. Therefore, with such abundance of factors of production, skilled labour force, raw materials, and a mature production & allied industries’ ecosystem, the sector is increasingly attracting both global and domestic investors to manufacture, assemble, sell, and export from a single destination. 

As we move forward on this exciting path of revolution in this key sector of consumer necessity, the potential for this sector remains immense. With the private sector and domestic manufacturers leading the way, driven by the impressive growth of the domestic market, India is now well on its way to becoming a major furniture manufacturing hub and imbedding itself deeper into the global value chains. 

 

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