Growing Economy Spurs Surging Demand for Furniture

India is experiencing a positive economic surge, driven by a combination of favourable factors. The world’s fastest-growing major economy, India’s $3.7 trillion economy reached 7.2% GDP in FY23 and is expected to grow 6.8% in 2024-25. This positive economic growth is fuelling a consumer boom, positioning India to become the world's third-largest consumer market by 2027. With disposable income rising 14.6% p.a. and household spending exceeding $3 trillion, India’s middle class is driving increased spending across various sectors. At the same time, the proportion of nuclear families who spend 30% more than joint families is expected to reach 74% by 2025. With rapid urbanization, the urban population is expected to reach 40% by 2036. A thriving retail sector poised to touch $1 trillion by 2025 coupled with a projected $350 billion online retail market is transforming India into a global economic powerhouse.

D2C sales are predicted to increase at 36% CAGR to reach $17 billion by 2030. Younger purchasers with shifting preferences (modern, useful, and versatile modular designs) are driving demand for the furniture industry in India. Furthermore, the appeal of traditional handicraft-design mixed furniture with modern functionalities is producing a unique line of possibilities leading to a growing range of offerings for consumers.

These factors have created a very successful decade for the Indian furniture industry which saw a further boost due to a strong tourism and hospitality industry. Other than a blip due to COVID-19, this growth is expected to continue into the future, supported by a growing economy, real estate, IT & service sectors and increasing affluence in urban & rural areas.

Organised Retail: Way Forward for the Furniture Industry

Presenting an exclusive Q&A with Dr. Hitesh Bhatt , Director - Marketing & Communications, Editorial Director – STOrai Magazine, Deris Micheal

F+D: The Indian furniture industry is witnessing significant growth. What factors are driving this expansion?

HB: India has a strong tradition of furniture going back centuries. By merging our traditional crafts with modern manufacturing processes, we can give a strong and sustained push to the Indian furniture industry. The key drivers currently driving the furniture industry expansion are the rising middle class, increasing urbanization, growing demand by tier 2 & tier 3 cities and changing consumer preferences, which can be at par with international markets are key drivers. The growing demand for high-quality, functional furniture, coupled with the increasing disposable income of Indian consumers, has created a favourable market for the industry.

F+D: Can you give an overview of the current global scenario?

HB: The global furniture market was valued at $537 billion in 2022 and is projected to reach $692 billion by 2027. While the Asia-Pacific region, particularly China, currently dominates the market, global dynamics such as the US-China trade war have created new opportunities. India's current contribution to the global market is modest, underscoring the urgent need for strategic overhauling to enhance our international standing.

F+D: Also give us an overview of the Indian furniture industry and where it stands in terms of exports.

HB: The Indian furniture market was valued at approximately $23 billion in 2022 and is projected to grow to roughly $32.7 billion by 2026. The sector remains largely unorganised with small-scale manufacturers, local carpenters and artisans comprising 80-90% of the market share. Being unorganised, there is a lack of standardisation, including spotty quality of products.

Geographically, the industry is concentrated in regional clusters across states like Gujarat, Punjab, and Kerala, each known for specific types of furniture. Despite this apparent specialisation, the fragmented nature of the marketplaces brings about severe limitations on economies of scale and hurts India's competitiveness on the global stage. Although growing at 20% annually, the country's furniture exports stand at just $2.86 billion and rank 16th in the worldwide export market.

F+D: In this scenario, what are the opportunities and trends for the industry?

HB: Here I would like to state that, yes, despite the seeming issues, the domestic market is a treasure trove of opportunities. With a population of 1.4 billion, a growing middle class and increasing awareness of design and function, there is a surge in demand for furniture across the country.

The advent of e-commerce has further democratized access to a variety of furniture products, catering to India's diverse tastes and preferences. Changing lifestyles post-COVID-19 have fuelled demand for home and office furnishings, with a noticeable preference for premium category products.

The growing demand for sustainable, eco-friendly furniture, coupled with the rise of e-commerce, presents exciting opportunities for the industry. Additionally, the increasing focus on home decor and the need for functional, space-saving furniture in urban environments are driving growth.

F+D: What are the government's initiatives to support the growth of the Indian furniture industry?

HB: The government has implemented various measures to promote the industry, including increased import duties on furniture, PLI schemes, and regulatory reforms to improve product quality and safety standards. These standards and initiatives aim to encourage manufacturers to develop innovative processes and meet new requirements, making the industry more competitive both domestically and globally.

F+D: What role can organised retail play in the growth of the Indian furniture industry?

HB: Organised retail is one of the best bets for Indian furniture manufacturing companies to scale up because the industry, by its very nature, is small-scale and characterised by unorganised operations, with local markets dominating the contours of the industry. Only organised retail can empower these manufacturers to reach a pan-Indian audience and access economies of scale. By partnering with organised retail channels, such as large-format stores, established retail chains and branded showrooms these manufacturers can gain access to a wider customer base.

F+D: What are the other advantages for manufacturers by connecting to organised retail?

HB: Organized retail offers streamlined supply chains, improved inventory management, and enhanced customer service, crucial for building strong brands. By entering this space, manufacturers can gain a competitive advantage and access a wider customer base. Leveraging branded retail spaces through partnerships or their own outlets increases visibility and export potential.

To address supply chain inefficiencies and global demand, a managed cross-border B2B marketplace is essential. By standardizing processes, improving quality control, and utilizing technology, Indian manufacturers can reduce costs and become more competitive.

The development of online furniture retailing, at an estimated 39% growth rate by 2026, further provides Indian manufacturers an excellent opportunity to reach more customers.

F+D: What do you think is the way forward for the industry?

HB: India can leverage its rich cultural heritage to create high-end, unique products that would make a difference in world markets.

To solidify its position as a global leader in furniture manufacturing, India must prioritize investment in design innovation, new materials, and intelligent solutions. By embracing modernization and leveraging its unique strengths, the industry can effectively meet the growing domestic demand and establish itself as a leading exporter of high-quality, culturally distinctive furniture. The future of the Indian furniture industry is promising, but realizing this potential requires a concerted effort from the government, industry players and technology providers alike.

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Contact for more information:

Haider Ali Mirza: +91 9619095955; [email protected]

Rampat Gupta: +91 9819567106; [email protected]