Description
NSSO employment data gives the total employment figures for the sector. Thus, the numbers are inclusive of the unorganised sector employment figures as well. According to its 68th Round, 50% of the total employment in furniture manufacturing is concentrated in the five states of West Bengal, Uttar Pradesh, Maharashtra, Bihar and Gujarat. West Bengal, UP and Maharashtra alone account for nearly 38% of the work force.
? Demand for furniture in India surged at
12% annual rate over 2007-2012, and in
2013 it increased at a rate of 15%.
? The market is moving more towards
organised segment. This is marked by
increasing customer preference for
readymade, branded furniture.
? Preference is tilting towards high-end, low
maintenance, quickly installable products,
with customisation options.
? Simple, contemporary designs are preferred
over heavy, complex traditional furniture.
Sources: Furniture in India, October 2013, Euro monitor
784
878
983
1101
1267
2216
2009 2010 2011 2012 2013 2017
I
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B
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l
i
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?
?
?
?
? Youth aspiration to enter this sector is low and existing workforce is looking at other sector/ opportunities for better
wages and facilities.
? Sector doesn’t offer competitive wages compared to other employment options such as- Drivers or self employment
opportunities
? In India absolute consumption is very high. However, Per capita consumption is low as compare to other countries,
largely due to huge income disparity. However with rise in middle class segment, trend is moving towards achieving
high per capita consumption in future.
? Raw material is available only in limited states. It leads to manufacturers purchasing raw material from other states,
paying transport & carriage apart from other charges. It results to higher raw material cost increasing their
manufacturing cost.
? While a large amount of manufacturing activity takes place in unorganized sector, market is slowly moving towards
technology advancement with growing number of organized players stepping-in. As unorganized segment is having a
major share in Furniture and Furnishings sector, therefore their products are not competitive enough in the domestic
as well as Global market.
? As per an ASSOCHAMreport, there are total 1,419 registered furniture factories. However, only 1,157 factories were
under operation as of 2011-12 i.e. about 20 per cent of registered furniture factories in India were non-operational
due to labor dogs & lack of modernization
?
?
?
?
ii
355,124 16.58%
238,544 11.14%
203,124 9.49%
150,996 7.05%
138,213
6.45%
137,156
6.41%
122,181
5.71%
117,997
5.51%
104,121
4.86%
94,117
4.40%
83,652
3.91%
82,592
3.86%
73,238
3.42%
55,643
2.60%
184,663
8.62%
NSSO employment data gives the total employment figures for the sector. Thus, the numbers are inclusive of the
unorganised sector employment figures as well. According to its 68
th
Round, 50% of the total employment in furniture
manufacturing is concentrated in the five states of West Bengal, Uttar Pradesh, Maharashtra, Bihar and Gujarat. West
Bengal, UP and Maharashtra alone account for nearly 38%of the work force.
About 97% of the workforce involved in furniture sector are school drop outs. Of this, 88% have an education
qualification of secondary education or less.
In the organized furniture segment, workers account for more than half of the total workforce. Managerial and
supervisors account for 10% of the total workforce and contractor workers account for nearly 25 percent of the total
workforce.
Source: NSSO 68th Round, KPMG in India Analysis, ASSOCHAM
High Low
iii
Source: Primary Interactions, NSSO 68
th
Round of EU Survey, KPMG Analysis
Source: Primary Interactions, KPMG Analysis
The sector currently employs over 4.11 million employees and is slated to employ more than 11.29 million employees by 2022.
This implies additional creation of ~7.2 million jobs in the 9 year period.
The period 2017-22 will see a higher growth in employment vis-a-vis 2013-17 due to expected changes in consumer
preferences and penetration of organized furnishing services in tier-I and tier-II towns.
An analysis of the breakup of workforce across organized and unorganized segments indicates that the share of organized
employment would increase from 5% in 2013 to 13% by 2022
2.16 3.39 5.95 1.24 2.56
0.29 0.40 0.61 0.12 0.20
1.67 2.60 4.73 0.93 2.13
Organized
13%
Unorganized
87%
2022
Organized
5%
Unorganized
95%
2013
iv
Carpenter
379 91 7088 1904
Cane, willow, bamboo work
1 1 32 16
Fitter
1731 8650 55040 293792
Interior decorating and designing
32 36 704 896
Machinist
441 84 17984 2160
Mechanic machine tool maintenance
70 6 1680 144
Operator advanced machine tool
4 1 0 0
Upholsterer
1 0 16 0
Upholster
3 2 48 32
Aside these institutes, electrical engineers from various colleges are hired in the lighting industry. Also, IITs and NITs
offer course on interior designing.
Source: Directorate General of Employment & Training, KPMG Analysis
National Institute of
Design (NID)
Ahmedabad
? 4 year graduate diploma in design
? 2.5 year post graduate diploma in design.
Indian Institute of Crafts
and Design (IICD)
Jaipur
2 year Post Graduate Diploma in Craft Design with Hard Material
Specialization
MIT School of Energy
and Lighting
Pune
2 year course of Lighting including Illumination Engineering incorporating the
art, science and technology of lighting
Srishti School of Art,
Design and Technology
Bangalore
? 3 year professional diploma program program in furniture and spatial
design
? 2 year post graduate advanced professional diploma program in furniture
and spatial design
? Labor is easily available in Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Orissa, Maharashtra.
? People in these states have no alternative employment opportunity and as they are minimally skilled, they find furniture &
furnishing sector attractive.
? Youth aspirations for employment in the sector across demand clusters is low considering that these geographies are
metro, tier 1and tier 2 cities with better employment prospects in other manufacturing/services segments.
v
Focus on Research and development ? Research and development has to be a focus area, hence there is a need for
sector-academia collaboration as well as individual R&D efforts by companies.
Liberalize Tax Policy ? The Government of India presently allows duty free import of furniture for all
the SEZs and STPIs. A sales tax of 14.5% is being imposed for transactions
with local players. This incentives import rather than local buying, which is
affecting the sector growth. Revisiting this tax policy will help local business
To Design Course Content in
Alignment with Global Trends
? Collaborative training should be encouraged in the sector. Due to increased
automation, machine operation is driving production in the organised sector.
Machines are mostly imported and thus operating them needs specialised
guidance. Investment on such machines for training purposes could be
unviable given the rapidly evolving technologies. Thus, having foreign partners
to run training programs can result in effective and efficient knowledge
sharing. More initiatives like the Karnataka German Multi Skill Development
Centre should be encouraged and initiated across the country
Standards in Quality and
Certifications
? At present there are no standards in the sector against which production
quality can be benchmarked. Also, there is no standard authority to issue
certificates for any training course. These need to be developed if the sector is
to gain patronage by the potential workforce
Shift to Necessity sector ? It should be considered as a necessity good and VAT should be reduced for this
sector.
Minimum wage rate policy ? Minimum wage rate policy should be revised. As it is discouraging labor to use
their skills efficiently.
vi
S. No Section Page
1. Context and approach 4
2. Industry classification 6
2.1 Furniture 7
2.2 Furnishings 9
3. Industry overview 12
3.1 Industry Size, Growth trends 13
3.2 Government policies 16
3.3 Key Trends and growth drivers 19
3.4 SWOT analysis 23
4. Overview of key industry segments 24
4.1 Key segments in Furniture Industry 25
4.2 Key segments in Furnishings Industry 26
5. Geographical clusters 34
6. Demographic characteristics of workforce 36
7. Incremental human resource requirement (2013-17, 2017-22) and skill gaps 40
8. Training Infrastructure 46
9. Recommendations for stakeholders 51
3
Annual Survey of Industries
National Skill Development Corporation
Compounded Average Growth Rate
National Industry Classification
National Sample Survey Organization
Micro, Small & Medium Enterprises
Customer Relations Manager
Compact Fluorescent lamp
Light Emitting Diodes
Industrial Training Institutes
Center For Industrial Studies
National Occupation Standards
Sector Skill Council
Special Economic Zones
Labor Management Information System
Mahatma Gandhi National Rural Employment Guarantee Act
The Associated Chambers of Commerce and Industry of India
Ingvar Kamprad, Elmtaryd and Agunnaryd
incandescent lamp
Bureau of Energy Efficiency
Wal-mart stores inc.
carrefour SA
Association of Furniture Manufacturers of India
Singapore Furniture Industries Council
India International Furniture Fair
National Institute of Design
Indian Institute of Crafts and Design
Foreign Direct Investment
5
NSDC had conducted sector-wise skill gap studies for 19 high priority sectors in 2008–09 .
? KPMG has been engaged as a consultant to help evaluate the skill gap across 25 sectors and
develop actionable recommendations for its stakeholders.
? Mandate includes sector and sub-sector level analysis, demand-supply projection, estimation of
incremental man-power requirement between 2013-2017 and 2017-2022, identification of key-
employment clusters, and SWOT analysis of each sector
? Study also aims to take qualitative insights from stakeholders on enablers and challenges for
each sector, way forward in terms of specific policy level actionable recommendations
? Study led by industry – Sector Skill Councils and a panel of professionals from different sub-
sectors were consulted for their inputs on industry trends, key takeaways in terms of skill
requirement, qualitative insights to understand specific interventions required for each sector
and to validate the quantitative results and recommendations
? 6 sectors were added to the list of NSDC priority sectors for studying the skill gaps
Updated study also includes
? Identification of top 20 job-roles in each sector, case studies around good training practices, sub-
sector level indicators and growth factors
? Study also includes understanding of existing training infrastructure, work-force characteristics
and employment clusters,
? Macro economic factors, central and state governments policies and their envisaged impact
? Synchronisation of the sector wise demand from the district level skill gap studies
? Recommendations for key stakeholders - Industry, NSDC, Training organizations and Government
? Environment scans every year till 2015-16 including SWOT analysis for the sector
7
3100: manufacture of
furniture
This class includes manufacture of furniture of any kind, any material (except stone,
concrete or ceramic) for any place and various purposes
31001 Manufacture of furniture made of wood
31002 Manufacture of furniture made of cane & reed
31003 Manufacture of furniture primarily of metal
31004 Manufacture of furniture primarily of plastic
31005 Manufacture of mattresses and pillows
31009 Manufacture of other furniture
Source: National Industrial Classification 2008, Central Statistical Organisation, Ministry of Statistics and Programme Implementation, GOI
2219 : Manufacture of
other rubber products
22191 Manufacture of rubber plates, sheets, strips, rods, tubes, pipes, hoses and
profile -shapes etc.
22192 Manufacture of rubber conveyor or transmission belts or belting
2396 : Cutting, shaping
and finishing of stone
This class includes cutting, shaping and finishing of stone for use in
construction, in cemeteries, on roads, as roofing etc.
23960 Cutting, shaping and finishing of stone
2817 : Manufacture of
office machinery and
equipment
This class includes manufacture of white boards
and marker boards
4659 : Wholesale of
other machinery and
equipment
46591 Wholesale of office machinery and equipment, except computers and
computer peripheral equipment
4759 47591 Retail sale of household furniture
8
Sources: KPMG in India Analysis, NIC 2008
The processes used in the manufacturing of furniture are standard methods of receiving material, cutting & moulding,
component fabrication, assembly, finishing & packaging. The design of the article, for both aesthetic and functional
qualities, is an important aspect of the production process.
Some of the processes used in furniture manufacturing are similar to processes that are used in other segments of
manufacturing. For example, cutting and assembly occurs in the production of wood trusses is the same as in general
manufacturing of wood product. However, the multiple processes distinguish wood furniture manufacturing from wood
product manufacturing.
Similarly, metal furniture manufacturing uses techniques that are also employed in the manufacturing of roll-formed
products. The moulding process for plastics furniture is similar to the moulding of other plastics products.
Furniture manufacturers use channels like Direct Sale, Wholesale, Retail. Now manufacturers are adopting Hybrid model
( Brick Motor and e-retailing). E-retailing is a new concept but is becoming popular these days.
Raw material
procurement (wood,
metal, cane & reed,
plastic)
Processing
Assembling
Finishing
Designing furniture for
Home
Office
Contract
Direct Sale
Wholesale
Retail(brick & motor, e-
tailing)
9
10
9524 Repair of furniture
and home furnishings
95240 Repair of furniture and home furnishings
4330 Building completion
and finishing
43301 Installation of doors, windows, door and window frames, fitted kitchens of wood or
other materials
43302 Interior completion such as ceilings, wooden wall coverings, movable partitions etc.
; Laying of parquet and other wood floor coverings, carpets
and linoleum, wallpaper; tiling with ceramic, concrete or cut stone ceramic
etc.
43303 Interior and exterior painting, glazing, plastering and decorating of buildings ( does
this mean interior decoration)
or civil engineering structures
43309 Other building completion and finishing
Source: National Industrial Classification 2008, Central Statistical Organisation, Ministry of Statistics and Programme Implementation, GOI
11
Sources: KPMG in India Analysis, NIC 2008
? Interior completion such as ceilings, wooden wall coverings, movable partitions etc. , laying of parquet and other
wood floor coverings, carpets and linoleum, wallpaper; tiling with ceramic, concrete or cut stone ceramic.
? Interior and exterior painting, glazing, plastering and decorating of buildings ( does this mean interior decoration) or
civil engineering structures.
? Installation of doors, windows, door and window frames, fitted kitchens of wood or other materials
? Repair of furniture and home furnishings.
.
Furnishing Manufacturing has already been included in other sector report that is why we are not including
manufacturing into our report here. Sales and installation has been taken together because majority of player plays
both the activities together.
13
? Demand for furniture in India surged at 12% annual rate over 2007-2012, and in 2013 it increased at a rate of
15%.
? The market is moving more towards organised segment. This is marked by increasing customer preference
for readymade, branded furniture.
? Preference is tilting towards high-end, low maintenance, quickly installable products, with customisation
options.
? Simple, contemporary designs are preferred over heavy, complex traditional furniture.
Sources: Furniture in India, October 2013, Euro monitor
Home furniture is the largest segment in the
Indian furniture market, accounting for about 65
percent of sales.
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Bed room
40%
Living
15%
Kitchen
10%
Work Station
20%
Storage
7%
Seating
8%
Source: KPMG India Analysis , April 2014
14
Top five countries from which India imported furniture in 2012 were China, Germany, Malaysia, Italy, and the China
largely dominates the furniture imports into India followed by Germany, Malaysia, United States of America, Italy and
the US.
:
? The demand for branded furniture has increased in India due to the emerging upper and middle class urban
population.
? Although demand for local artisan furniture still exists, the growth is in imports as Indians seek contemporary
designs in a modern world.
? The reduction in import tariffs has also driven the growth of imported furniture. All these factors provide a very
favourable environment for those importers interested in importing furniture to India.
? Import products are Bedding, Mattresses, Mattresses supports, Cushions & similar stuffed furnishing, lamps &
lighting fitting.
Import of Furniture in India received a boost in 1998, when importers no longer required a license or special permission
to import to India. By 2000, the India government allowed foreigners to invest 100% in local furniture manufacturing.
This policy enticed companies such as Sauder and Herman Miller (US), Lista (Switzerland), and Gautier (France) to enter
the India market.
For the period 2008-13, furniture imports grew at a CAGR of 17%. The share of total furniture and furnishings import in
total Indian imports was 0.2%in 2012.
JNPT accounted for 39% of Import followed by Delhi TKD ICD and Bangalore ICD which account for 18% and 11% of
imports respectively.
Average value per shipment of Furniture imports in India is USD 608,948
Source: Selected Statistics of foreign trade of India
China
54%
Germany
12%
Malaysia
8%
Italy
7%
UK
3%
USA
3%
Thailand
2%
Hong Kong
2%
Srilanka
2%
Others
7%
15
.
India is taking various initiatives to increase furniture export market. For this Indian Govt. has requested Bhutan to
remove restrictions imposed on import of furniture in Bhutan.
India has potential to make forest produce like wood and paper as major foreign exchange earner and UN’s Food and
Agricultural Organization (FAO) is ready to extend knowledge and technological assistance for the same , a top FAO
official said.
FAO official said in a meet that through sustainable afforestation policy India could transform its forest wealth a major
commercial venture.
India and China have signed a memorandum of understanding for promotion of exports of Indian handicrafts. The MOU
will focus on promotion of exports of products such as ethnic and contemporary furniture, wooden handicrafts
including furniture from Jodhpur and Saharanpur, imitation jewellery and fashion jewellery and art metal ware from
Moradabad.
Source: Selected Statistics of foreign trade of India
India is exporting maximum share of furniture to United States and United Kingdom accounting for 47% of total
export. However, from US and UK, India is importing only 5%of total imports.
India is importing maximum share form China and Germany accounting for 66% of total import. However, India is not
exporting furniture to China.
Mundra accounted for 37% of export followed by Delhi TKD ICO and JNPT which accounted for 18% and 10% of
imports respectively. Average value per shipment of Furniture exports in India is USD 250,522.
US
36%
UK
11%
Germany
8%
N/A
7%
France
6%
Netherland
4%
Australia
3%
Canada
2%
Belgium
2%
Others
21%
16
? Encouraging foreign direct investment, especially in areas which create jobs and provide technological advancement
? Passed regulations that allowed single-brand companies such as Ikea to open outlets without local partners.
? Allowed foreign multi-brand retailers such as wal-mart stores inc. (WMT) and carrefour SA (CA) to own as much as 51
percent of retail outlets
? Imports of furniture were liberalized in April 1998
? Importers in India require no license or prior permission to import furniture.
? Importers should have valid IEC (Import Export Code) issued by Directorate General of Foreign Trade.
Impact
? Import policy is leading to excessive competition in the industry.
? Many manufacturing units are shutting down as readymade products can be easily imported. Therefore, Organized
segment is coming into retailing rather than manufacturing the products.
? Unemployment has increased as manufacturing plants are decreasing.
? Furniture imports into India have to pass through the procedure of Customs clearance as they cross the Indian
border.
? The importers need to present Originals of Commercial invoice, packing List, Certificate of Origin, and Bill of
Lading.
? Basic Custom Duty (15 per cent) + 2 per cent Education Cess)
? Packages should comply with Import Policy provisions as laid down in The Policy circular 44 (RE 2000)/1997-2002
DT24th November, 2000.
? Each unit package should carry the following details:
(a) Name and address of the importer;
(b) Common name of the commodity packed;
(c) Net quantity in terms of standard unit of weights and measures
(d) Month and year of packing in which the commodity is manufactured or packed or imported.
1 2 3 4
Import Policy
Customs Clearance(1962)
Duty
Packaging
Source: Planning Commission Reports, KPMG Analysis
17
FDI In Retail IKEA to invest Rs. 10,500 Crore in India.
? Proposal cleared in May 2013. IKEA has identified Haryana, Andhra Pradesh,
Maharashtra and Karnataka to set up its single brand retail stores as part of the
investment.
? The firm has also proposed setting up 10 furnishing and home ware stores as well
as allied infrastructure. It also plans to open 15 more stores in over 10 years in
India.
Hettich announced in September 2013 that it would invest Rs. 500 Crore in India over 5
years.
? The German company, which established operations in India by setting up a 50:50
joint venture with the Saroj Poddar Group in 2000, has launched its Vadodara
facility, set up at an investment of Rs 100 crore.
? The company expects to export 40% of its production from the Vadodara plant by
2016.
NCPL - Casa Shamuzzi
Agreement
Noida-based developer NCPL entered into a licensing and marketing arrangement with
Italian furnishing brand Casa Shamuzzi in January 2013.
Casa Décor Expansion Plans In October 2013, Casa Décor, a joint venture of luxury furniture retailer Poltrona Frau
and Tata Group indicated that it is looking at scaling up its business in the high end
furniture retailing segment for home, offices and hospitality sector.
FDI in Retail In November 2011, India's central government announced retail reforms for both multi-
brand stores and single-brand stores. FDI in single brand retail stores was allowed to
be 100%while for multi-brand, the limit was increased to 51%. This has paved way for
big foreign furniture retailers like IKEA, Hettich to invest in India. This is a major step in
promoting competition and opening up of retail space in India.
Source: KPMG Analysis
18
Source: KPMG Analysis
FDI In Retail Panasonic submits application to set up single brand retail stores for lighting products (Feb 2014)
? Submits application jointly with it’s fully owned Indian subsidiary Anchor Electricals for setting
up company owned stores exclusively for Panasonic branded LED light fixtures and other
lighting décor products
? Currently it has set up an exclusive LED lighting centre in Mumbai. Plans to roll out similar
centres in Bangalore, Delhi, Chennai and Hyderabad.
Philips Research
Facility Expansion
Philips India in Nov 2013 announced expansion of its research and development facilities for
lighting in India.
? Philips has a lighting innovation centre in Noida.
? The company has so far invested $15 million in its Noida innovation facility.
Actis-Halonix
Acquisition
Private equity firm Actis, through its affiliates Argon South Asia Ltd and Argon India Ltd, has
bought the general lighting business of Halonix Ltd for an enterprise value of Rs160 crore, as per a
stock market disclosure in Sept 2013.
Sahasra
Electronics
Investment
In June 2013, Government of India cleared the Rs.11.1 crore investment proposal by Sahasra
Electronics for manufacturing LED lights in Noida as part of the National Policy on Electronics.
Bachat Lamp Yojna The Bachat Lamp Yojana Programme of Activities (PoA) is a scheme developed by BEE to promote
energy efficient lighting in India. Under the BLY scheme quality long-life CFLs would be
distributed by SSC-CPA implementer(s) to grid-connected residential households in exchange of
an incandescent lamp (ICL) for Rs15. Once the CFLs have reached their end of life or any CFLs
which have failed prematurely during the project period, the SSC-CPA implementer(s) would
arrange for the collection and disposal of CFLs as per applicable environmental norms.
National Policy on
Electronics 2012
The objective is to create a globally competitive electronics design and manufacturing industry to
meet the country’s needs and serve the international market.
Goals for 2020:
? Attract an investment of USD 100 billion
? Reach a turnover of USD 400 billion
? Create an employment of 28 million
? Enhance exports fromUSD 8 billion to USD 80 billion
? Grow the chip design/ embedded software industry to USD 55 billion
Lower Excise duty
on LED lights
In 2011 budget, excise duty on LED bulbs was lowered from 10%to 5%and full exemption on the
special CVD of 4%was proposed.
19
•Youth aspiration to enter this sector is low and existing workforce is looking at other sector/
opportunities for better wages and facilities.
•Sector doesn’t offer competitive wages compared to other employment options such as- Drivers or
self employment opportunities
•In India absolute consumption is very high. However, Per capita consumption is low as compare to
other countries, largely due to huge income disparity. However with rise in middle class segment,
trend is moving towards achieving high per capita consumption in future.
•In India raw material is available only in limited states. It leads to manufacturers purchasing raw
material from other states, paying transport & carriage apart from other charges. It results to
higher raw material cost increasing their manufacturing cost.
While a large amount of manufacturing activity takes place in unorganized sector, market is slowly
moving towards technology advancement with growing number of organized players stepping-in. As
unorganized segment is having a major share in Furniture and Furnishings sector, therefore their products
are not competitive enough in the domestic as well as Global market.
As per an ASSOCHAM report, there are total 1,419 registered furniture factories. However, only 1,157
factories were under operation as of 2011-12 i.e. about 20 per cent of registered furniture factories in
India were non-operational due to labor dogs & lack of modernization
Source: KPMG India, ASSOCHAM
20
Recruiting labour is considered a huge challenge. Two main reasons attached to it are:
? Attraction towards white collared jobs
? Government policies like the MGNREGA where people get short term
employment for attractive wages. This has affected migrant labour especially.
? Sector is also not considered higher in social status leading to youth not willing
to join the workforce
? There are no industry standards for furniture manufacturing at the moment.
? he sector does not have an Sector Skill Council and any training standards at the
moment
? Very few institutes have dedicated course for furniture industry.
? No standard parameters for quality check are available in Indian furniture
industry. Thus, there is no clear delineation of job roles.
? Lack of parameters or certifying agencies are resulting into no check on standards
in manufacturing, wage rates, working environment etc.
? Automation is leading to de-skilling. This means people need to be trained in
machine operations mainly.
? Real concern is the skill set of technical people like production managers,
designers, etc.
? With large part of sector being unorganized, Service tax is considered higher for
unorganized segment to bear.
? VAT introduction is a hindrance for trade within India.
? Policies on procuring raw material is not conducive for industry and benefits are
limited to few players/regions.
? Cartage problem is faced due to availability of raw material in some states only.
? There is a lack of incentive for unorganized segment to adopt newer technology.
Source: Industry Interaction
21
Private final consumption expenditure on furniture and furnishings has grown at a CAGR of
9.51% between 2004-05 and 2010-11. Revival in real estate and hospitality sectors
combined with rising disposable incomes will further drive the furniture industry’s growth
in India
Incandescent bulbs are being replaced by CFLs and this has indirectly resulted in increased
production of CFLs. The size of the CFL market in 2009 pegged at 230 million units and is
expected to exceed 400 million units by the year 2014.
Consumer preference is changing directly with their purchasing power. The purchasing
power of Indian consumer has made it possible for the real estate developers and interior
decorator to build apartments and home fitted with super high end services like, spa,
sauna, Jacuzzi. (ANI)
Segments like Modular kitchen, Glass glazing, false ceiling, wall tiles, wallpaper, interior
designing are the emerging segments. These are the reason for expansion of the sector.
Sources: KPMG in India analysis
22
Source: KPMG in India analysis
? Most businesses are now operating a hybrid business model where
traditional stores are managed along side online sales.
? Businesses are moving from dealership to franchisee models for increased
penetration.
? This helps the business build its brand value and also at the same time
gives it a lot of visibility.
? Consumers are increasingly preferring high-end, low maintenance, quickly
installable products, with customization options to cater for the specific need.
? The business is becoming more customer centric with more people opting for
smartly designed furniture with a stress on functionality.
? People are becoming more brand conscious and they are increasingly demanding
premium branded products.
? This has been a critical factor in driving the demand for both furniture and
furnishings.
? Incandescent lamps, the most energy inefficient technology, are being replaced
by energy efficient CFLs and LEDs.
? LED and CFL are expected to grow at a higher rate.
? Some state Governments in India like the Government of Tamil Nadu and
Karnataka have banned the use of incandescent lamps in government offices.
23
? Economical production cost
? Increasing demand for simple, clean designs
? Excellent outsourcing facilities
? Increasing share of the organised segment
? Evolving efficient supply chain management
? Better process control and storage facilities
? Better information availability to both the consumers and the producers
? Improved business climate and infrastructure facilities
? Highly unorganised and fragmented sector
? Piece driven industry that operates on demand
? Since the industry is highly fragmented, and lacks direct market exposure, workers not equipped
properly
? Poor supply chain management system
? Poor stock control facilities
? Slow absorption of innovation change
? Lack of skilled manpower
? India is still a net importer of furniture
? Absence of Sector Skill Council for the sector
? No standards available for industry to benchmark production
? No nodal body for certification available
? No known skill initiatives focused on the sector
? Expanding middle income group with larger pockets that drive demand
? Huge opportunity in Design space and also in emerging market segment in services
? Huge unexplored retail space available for the industry to foray into
? Huge unpenetrated rural market
? Low labour costs
? Unexploited research and development capability
? Design space opening up due to change in consumer preferences and awareness
? Hybrid business models offer scope for business expansion
? Wooden furniture has the single largest market in India. With more policies aimed at protecting
the environment being tabled, there may be limitations imposed sourcing wood from domestic
forests.
? Organised retailing in furniture is relatively new in India and local firms could suffer due to the
new FDI rules which will bring in established foreign players into the foray.
? Large variations in stock control owing to new production methods
? Highly bureaucratic and unreliable business environment
? Unfavourable Government tax policies promoting imports
? Local firms could suffer due to the new FDI rules which will bring in established foreign players
into the foray
Sources: KPMG in India analysis
25
Source: KPMG in India Analysis
Residential ? Dining and Living
? Bedroom
? Kitchen
? Storage
Office ? Desk Operatives
? Storage
? Lounge
Hotels Beds, dressers, wardrobes, bars, tables, panelling
blinds, bed treatments, lighting
Hospital/Nursing homes Beds, chairs, tables, lighting, bed treatment
Educational Institutes Schools and College
Retail Shelves, counters, tables, chairs, desks, lighting
Restaurant and Public Houses Bar stools, tables, chairs, lighting
Wood ? Sheesham
? Teak
? Rosewood
? Particle wood
? Mango
? Plywood
Metal ? Stainless steel
? Aluminum
? Iron
Plastic
Cane & Reed
? Rapid urbanization, changes in socio-economic structure, greater awareness among consumers about wood
coatings, increased activity in construction and furniture are expected to influence the demand for adhesives,
epoxies and wood coatings in India.
? Woodworking adhesives and wood finishes use is driven by the growth of the Furniture industry in India
? Key states for wood furniture: Gujarat, UP, Punjab, Kerala, Andhra Pradesh, West Bengal
26
? Interior completion such as ceilings, wooden wall coverings, movable partitions etc. , laying of parquet and other
wood floor coverings, carpets and linoleum, wallpaper; tiling with ceramic, concrete or cut stone ceramic.
? Installation of doors, windows, door and window frames, fitted kitchens of wood or other materials.
? Interior and exterior painting, glazing, plastering and decorating.
? Repair of furniture and home furnishings.
While Indian home furnishing industry has a place of its own, it faces stiff competition from China. Though China is
clearly the leading exporter in the world of home furnishings, it is not a direct competitor to India because it mainly
uses man-made fibers and caters to mass markets whereas India produces natural fibers and serves niche markets.
27
Lighting sales grew at a CAGR of 11.5% between 2007 and 2012 and in 2013 grew at a CAGR of 5.1% .
Expected to grow at CAGR of 5.1% till 2017.Per capita consumption of lighting is low in India and thus
potential for growth is high.
Lighting will get a boost due to transition from
bulbs to CFL and LED lamps. Transition is being
made to CFLs and LEDs from incandescent lamps
as a measure of energy efficient lighting.
Incandescent lamps, however, will not disappear
altogether as consumers in small towns and rural
areas prefer these over CFL lamps due to price-
related issues. CFLs and LED demand will grow at
a high rate in future.
18.2
20.3
22.7
25.9
28.9
31.4
33.0
40.2
2007 2008 2009 2010 2011 2012 2013 2017
I
N
R
b
i
l
l
i
o
n
HID
28%
Halogen
7%
Incandescent
6%
LED
6%
CFL
12%
LFL
13%
HID
28%
*High Intensity discharge
Source: KPMG Analysis, March 2014
28
Solid Vinyl’s
Poly Vinyl foam
Silk
Viscose
Natural
? Sales of wall art prints and posters have risen in India as people are quite attracted towards the western style of
painting as well as photography which are made available in prints format on paper.
? Wallpaper is manufactured mainly in Delhi, Uttarakhand, Ambala, Gujarat, Maharashtra, West Bengal, Hyderabad,
Ahmedabad, Chennai, Naraina, Tamil Nadu, Karnataka, Rajasthan and Uttar Pradesh.
? Online art stores have also risen in the past that sell various forms of art prints, posters as well custom framed art
online in India.
? Today, vibrant colours are preferred over soft hues of whites and off-whites. They bring life to your interiors. Colours
like lemon yellow, deep orange, bright maroon and others are in vogue.
Thus with the rise of internet and retail formats, people in India have been very much receptive to buy art and decorate
their homes in a modern way.
? People who are looking for timesaving and convenience prefer wallpapers.
? It is also useful to those who have breathing and asthma, skin and allergy problems.
? Wallpapering can be done in just eight hours whereas painting takes 12 to 15 days.
? P.V.F. Wallpapers are fire retardant, tear sponge washable, heat resistant (thereby maintaining a steady room
temperature), odourless, noise-absorbing and clean and quick to install.
? Budgeting for good quality paint and wallpaper is almost the same, but imported wallpapers cost up to Rs.100 per
sq.m. Some special materials also cost up to Rs.200 per sq. ft. or more. They also suit every budget as Indian
wallpapers are available in a range of Rs.11 to Rs.80 per sq. ft. Inclusive of installation at site.
? The replacement becomes very economical, since the entire wall and ceiling does not need to be done again.
29
? With huge untapped potential, India is an enticing market for wall covering manufacturers.
? Demand for ceramic wall tiles is expected to show high growth in the region.
? Europe and Asia-Pacific constitute two of the largest regional markets, as stated by the new market research
report on Wall Coverings.
? In terms of most promising growth potential, Asia-Pacific, backed by China, India, Indonesia, Thailand and others
is the clear winner, and forecast to expand at a CAGR of more than 3.0%through 2015.
30
False Ceilings in India are a relatively new concept but definitely a huge potential market. False ceilings are best
suited ceiling furnishing solutions for a tropical climate like India. The usual problems pertaining to dirt, hygiene
factor, expenses and maintenance are resolved by the use of False Ceiling boards or Tiles.
False ceiling demand is increasing with the increase in Real estate market. All the constructors and interior decorators
use false ceiling to make property attractive to buy.
False ceiling varieties like Grid Ceilings and Minimal Fiber Ceilings are fabricated from Solid PVC foam.
The false ceilings in India are available at various false ceilings supplier stores and retail outlets.
They can be customized depending upon design requirements and customer preference directly by the False Ceilings
Manufacturers in India.
The various advantages of False Ceilings making them
suitable for Indian Homes are:
? Durability
? Light Weight
? Portability
? Waterproof
? Fire Resistant
? Mild Acids and Alkali Resistant
? Unharmed by Fungus or Termites
? Minimal Affect of Harmful Chemicals
? Superior Quality
? Easy Installations
? Inexpensive
31
? The modular kitchen market in India is growing at a rapid rate in the country. The market is expanding as the
demand is no longer restricted to the upper middle class, but is gaining popularity among other socio-economic
classes also.
? According to a new report by RNCOS, the growth in the per capita income of people, coupled with efforts on the
part of organized players to offer services at affordable rates, are some of the factors which are providing a boost to
the modular kitchen demand in the country.
? At an annual growth rate of 40 percent, the business of kitchen appliances is head and shoulder above the IT
industry in the city. Modular appliances, which revolutionised the lives of homemakers with ease and elegance,
mean serious business for the NCR entrepreneur.
? According to a study carried out by web portal people in India are willing to invest an average of Rs2.5 lakh in
modular kitchens with some users willing to spend as much as Rs15 lakh
? The site has received tremendous response and is growing 100% every quarter.
? More than 85% of interest and investments in modern kitchens comes from Top 10 cities: Mumbai, Delhi, Bangalore,
Chennai, Hyderabad, Pune, Kolkata, Ahmedabad, Chandigarh, Jaipur
? ‘Indian’ style modular kitchens are more popular and receive four times the number of visits when compared to
the ‘Italian’ style modular kitchens.
? With emergence of nuclear families, increasing number of housing projects, growth in organized retail and a
changing view on home aesthetics, the modular kitchen market is anticipated to witness growth in the coming years
also.
32
? The Indian glass glazing industry is in the early stages of market development. In the 1990s, most high-end
buildings in various parts of India adopted glazing as a standard technology, especially driven by the IT boom.
? Currently, India’s glass production capacity is relatively low, compared to other developing Nations. Today,
glazing is common in most commercial structures in India, especially in malls, IT facilities and other corporate
buildings.
? Glazing is preferred mainly because it is light-weight and immediately uplifts the appearance of a building. It
requires relatively less maintenance, thereby making it an apt choice for builders.
? The introduction of FDI into the real estate sector has encouraged various international players to enter the
Indian market, thereby paving the way for world class standards of safety and quality in construction. This is
another key factor that is driving the growth of the market to an organised level.
? High growth regions, mainly the western and the southern regions of India, consume majority of the glass used
in glazing. Cities like Mumbai, Pune and Ahmedabad are the major consumers in the western region, and strong
sales force in these cities will assure higher market share.
? Southern cities like Chennai, Hyderabad, Bengaluru and Cochin are witnessing a rapid increase in construction
activities driving the growth for glass glazing in the region.
? Increase in demand for decorative glass with digital prints and adoption of green building techniques are
providing unprecedented opportunities for glass manufacturers in India.
? Construction of dwelling units is increasing and architects are using more glass and value-added glass.
? Greener glasses : The tropical weather conditions in India and the high level of solar radiation
? Gas-filled glazing (insulated glazing (IG), more commonly known as double glazing (or double-pane, and
increasingly triple glazing/pane) are double or triple glass window panes separated by an air or other gas
filled space to reduce heat transfer across a part of the building envelope)
? Coated glass, insulated glass and high-performance glass, are witnessing the emergence of a new breed of
customers, who make a conscious effort to overlook price for the purpose of safety and environment
sustainability.
33
Interior Designing is not new in India. Wonderfully done interiors of the hundreds of monuments and places of
worship across our country for thousands of years are the signs that interior designing exists in India since very long.
All this while, interior designing formed an integral part of its larger discipline, Architecture. However, in the late
1980s, interior designing came to be recognised as a separate discipline and with the liberalization of the economy in
1990, the profession of designing and decorating interiors has grown by leaps and bounds.
It’s scope has widened to include:
? : Private houses, bungalows, condominiums, farmhouses etc.
? : For corporate houses, government buildings.
? : Boutiques, department stores, malls, food and retailing centres.
? : Movies halls, theatres, theme parks, clubs, dramatic and musical theatre.
? : Restaurants, country clubs and hotels.
The key drivers in the growth of interior designing firms in India are:
? Construction boom in all major cities and in most small towns in India.
? The purchasing power of Indian consumer has made it possible for the real estate developers and interior
decorator to build apartments and home fitted with super high end services like, spa, sauna, Jacuzzi.
?
Rising need for professional help to make the limited living and working space more comfortable, beautiful and
practical.
? Rising number of exhibitions and decors in big cities and towns.
35
Srinagar
Kartarpur
Pondicherry
Vijayawada, Macherala
Thrissur,
Malapuram,
Ernakulam,
Taliparamba,
Kollam
Nagpur,
Nashik,
Gadchiroli
Surat, Vadodara,
Jamnagar,
Ahmedabad
Chhatarpur
Shikawati
Kanpur,
Saharanpur,
Lucknow, Bareily
Yamuna Nagar
Delhi
Dehradun
Patna
Beliaghata
Kanpur Steel Furniture UP
Saharanpur Wood Furniture UP
Lucknow Steel Furniture UP
Malappuram Wood Furniture Kerala
Ernakulum Wood Furniture Kerala
Taliparamba Wood Furniture Kerala
Gadchiroli Bamboo Maharashtra
Bareily Cane & Bamboo UP
Beliaghata Lamp West Bengal
Patna GLS Lamps Bihar
States with furniture clusters
Out of 1,419 registered furniture manufacturing units,
Maharashtra is the leading state with 222 registered
furniture factories followed by Tamil Nadu (201),
Rajasthan (124), Andhra Pradesh (119) and Karnataka
(112). The top five registered factories constitute almost
55 per cent of registered furniture factories in India.
Source: ASSOCHAM
37
355,124 16.58%
238,544 11.14%
203,124 9.49%
150,996 7.05%
138,213
6.45%
137,156
6.41%
122,181
5.71%
117,997
5.51%
104,121
4.86%
94,117
4.40%
83,652
3.91%
82,592
3.86%
73,238
3.42%
55,643
2.60%
184,663
8.62%
NSSO employment data gives the total employment figures for the sector. Thus, the numbers are inclusive of the
unorganised sector employment figures as well. According to its 68
th
Round, 50% of the total employment in furniture
manufacturing is concentrated in the five states of West Bengal, Uttar Pradesh, Maharashtra, Bihar and Gujarat. West
Bengal, UP and Maharashtra alone account for nearly 38%of the work force.
Source: NSSO 68th Round, KPMG in India Analysis, ASSOCHAM
High Low
“Registered furniture factories have more potential in terms of employment generation as on an average one registered
furniture factory generates 40 jobs whereas an unorganized factory generates just about three jobs.”
38
Source: NSSO 68th Round, KPMG in India Analysis
Upto Secondary
87%
Higher Secondary
9%
Diploma/Certificate
1%
Graduate
3%
In the organized furniture segment,
workers account for more than half of the
total workforce. Managerial and
supervisors account for 10% of the total
workforce and contractor workers
account for nearly 25 percent of the total
workforce.
Workers directly
employed: Men
51%
Workers directly
employed: Women
2%
Workers employed
through contracters
23%
Employees other
than workers:
supervisory and
managerial
10%
Employeed other
than workers: Oher
employees
13%
Unpaide workers
1%
About 97% of the workforce involved in
furniture sector are school drop outs. Of
this, 88% have an education qualification
of secondary education or less.
Most of the floor level employees have a
qualification of completing school
education or less. Thus, the statistics might
be a pointer that people working on
production floor constitute the largest
share.
People holding a diploma certificate is a
meagre 1% and 3% are graduates. This
4% will mostly be involved in the mid and
higher management.
Source: ASI 2010
39
Source: NSSO, ASSOCHAM
E
Maharashtra
15,100
Rajasthan
15,053
Tamil Nadu
9,318
Karnataka
4,998
AP
4,087
Of over 57,000 jobs being generated by registered furniture factories across India, Maharashtra is Numero Uno in
generating maximum of over 15,100 jobs followed by Rajasthan (15,053), Tamil Nadu (9,318), Karnataka (4,998) and
Andhra Pradesh (4,087) with top five states accounting for about 68 per cent of total employment generated by
registered furniture sector in India
41
Source: Primary Interactions, NSSO 68
th
Round of EU Survey, KPMG Analysis
Source: Primary Interactions, KPMG Analysis
The sector currently employs over 4.11 million employees and is slated to employ more than 11.29 million employees by 2022.
This implies additional creation of ~7.2 million jobs in the 9 year period.
The period 2017-22 will see a higher growth in employment vis-a-vis 2013-17 due to expected changes in consumer
preferences and penetration of organized furnishing services in tier-I and tier-II towns.
An analysis of the breakup of workforce across organized and unorganized segments indicates that the share of organized
employment would increase from 5% in 2013 to 13% by 2022
2.16 3.39 5.95 1.24 2.56
0.29 0.40 0.61 0.12 0.20
1.67 2.60 4.73 0.93 2.13
Organized
13%
Unorganized
87%
Organized
5%
Unorganized
95%
2013
42
Key Functions
(Director, Managers,
Designers, Business Heads, Design
Engineers)
(Carpenters
(experienced) , Supervisors, Engineers,
Procurers, Quality Control Technicians,
Technical Supervisors, Electrical
Engineers)
(Foremen,
Carpenters, Assemblers, Fitters, Painters,
Machine Operators, Field Technicians,
Electrician)
? Workforce of an organization can be broadly
grouped into either of the three categories
based on the level of experience:
? Needs Supervision
? Works Independently
? Manages a Team
? Workforce can either be skilled, semi-skilled
or unskilled. Skilled workers are mostly those
who manages a team, semi-skilled workers
are those who works independently and
unskilled people are those who needs
supervision.
? Education qualification does not play a vital
role in this sector. As floor level employees
are first given on-the-job training and starts
giving results within few days .
? Education qualification is required at upper
level to understand the market, innovation,
guidelines, etc.
Hierarchy
? Back end: Activities that are at the
factory level. Job roles include those
relating to production and supervision
of workers.
? Mid Segment: Activities that are
Related to supply chain management
and logistics
? Front end: Activities that relate to
distribution, sales and services
Procurement
Design
Production
Sales &
distribution
Services
43
Furniture Designer, Interior
Designer, Technical Architect,
Design Engineer
Purchasing Manager
Production Manager, Production
Engineer, Carpenters,
Assemblers, Finishers,
Polishers, Quality check
technicians, Machine operators,
Joiners, Painter, Cabinet Maker,
Furniture Maker, Supervisor and
, Foremen, Electrical supervisor,
Electrical Engineer, Test and
repair technician
Sales and Marketing Manager,
Dispatch Operative
? Knowledge on design trends and competition.
? Understand production capabilities, machines and tools.
? Interact with clients to understand their needs and evaluate
design options.
? Optimize part and product design.
? Knowledge of raw material costs, places for procurement.
? Coordinate with the design and internal production team
before buying the raw materials and machines needed for
production.
? Determine the costs and budget for procurement.
? Understand the production process.
? Ability to work with machines.
? Understanding of design requirements and knowledge on
products.
? Excellent understanding of the technical knowledge of chip
manufacturing, arrays etc.
? Knowledge of the market.
? Effective communication skills.
? Understanding of competitive information related to the
company and its products, pricing, marketing strategy etc.
Source: NCO 2004, ProdSkills UK, KPMG Analysis
Restorer, Fitter, Electrician
? Ability to handle the tools needed for fitting.
? Ability to understand design and knowledge of techniques
of restoration.
? Ability to effectively address the customer complaints and
provide the required services efficiently.
44
Source: KPMG in India analysis
(Foremen,
Carpenters,
Assemblers,
Fitters, Painters,
Machine
Operators, Field
technician,
Electrician, etc.)
? A good understanding of the production
process
? Ability to work with machines
? Ability to understand and read design
requirements competently
? Broad understanding of the industry
dynamics
? Lack of understanding of the industry
dynamics and processes involved.
? Inability to read and/or understand design
requirements.
? Lack of technical knowledge especially
w.r.t electrical light manufacturing.
(Carpenters
(experienced),
Supervisors,
Engineers, Quality
Control
Technicians,
Technical
supervisors,
Electrical Engineer)
? Sound understanding of the production
process
? Excellent communication skills
? Excellent man-management skills
? Strong estimation skills
? Excellent knowledge on product quality
audit skills
? Lack of understanding of the production
process and the capacity handling measure
of the plant.
? Lack of knowledge on comparable cost
options and quality measures.
? Lack of technical knowledge especially
w.r.t electrical light manufacturing.
? Ineffective communication.
? Lack planning and co-ordination of work
among employees.
? Lack man-management skills.
? Lack knowledge of new technologies and
machines.
(Director,
Managers,
Designers,
Business Heads,
Design Engineers)
? A deep understanding of the production
processes of the organization
? Strong knowledge of the market trends
and new technologies in the industry
? Strong knowledge and understanding of
the various National and International
standards relating to the process
? Strong analytical and cost estimation
skills
? Excellent communication skills
? Lack of specific knowledge in the industry
(raw material sourcing options, optimal
production process)
? Lack up-skilling of knowledge in the new
market trends & International practices
? Lack good communication and soft skills
45
Source: Euromonitor 2013, Primary Research, KPMG Analysis
1
2
3
4
5
? With increased exposure
to information and trends,
skilled designers who are
aware of market trends
will be needed.
? Retail skills like CRM,
sales, communication
along with logistics and
supply chain management
will be critical.
? E-retailing is emerging
along side traditional
stores and are operating as
hybrid models. Thus skills
on logistics and supply
chain management will be
very critical.
? Skilling required for
quality finishing and
packaging as
premiumisation should be
reflective of international
product standards.
? Incandescent lights are
being replaced by CFLs and
LED. LED and CFLs are
expected to grow at higher
rate. Thus, technical skills
needed in manufacturing
LED like luminaries will be
critical.
? Machine operators who
understand the production
process would be needed.
47
Maharashtra
Uttar Pradesh
We
West
Bengal
Bihar
? Labor is easily available in Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Orissa, Maharashtra.
? People in these states have no alternative employment opportunity and as they are minimally skilled, they find
furniture & furnishing sector attractive.
? Youth aspirations for employment in the sector across demand clusters is low considering that these geographies
are metro, tier 1and tier 2 cities with better employment prospects in other manufacturing/services segments.
? Labor seasonally migrate for work during off season and after that they go back to their home town.
? In Furniture and Furnishing sector, labor learn work while working under some manufacturer and after learning they
open their own manufacturing unit.
Source: Industry interaction, KPMG India
Orissa
Madhya
Pradesh
Sourcing Clusters
48
Carpenter
379 91 7088 1904
Cane, willow, bamboo work
1 1 32 16
Fitter
1731 8650 55040 293792
Interior decorating and designing
32 36 704 896
Machinist
441 84 17984 2160
Mechanic machine tool maintenance
70 6 1680 144
Operator advanced machine tool
4 1 0 0
Upholsterer
1 0 16 0
Upholster
3 2 48 32
Aside these institutes, electrical engineers from various colleges are hired in the lighting industry. Also, IITs and NITs
offer course on interior designing.
Source: Directorate General of Employment & Training, KPMG Analysis
National Institute of
Design
(NID)
Ahmedabad
? 4 year graduate diploma in design
? 2.5 year post graduate diploma in design.
Indian Institute of
Crafts and Design (IICD) Jaipur
2 year Post Graduate Diploma in Craft Design with Hard Material
Specialization
MIT School of Energy
and Lighting
Pune
2 year course of Lighting including Illumination Engineering incorporating
the art, science and technology of lighting
Srishti School of Art,
Design and Technology
Bangalore
? 3 year professional diploma program program in furniture and spatial
design
? 2 year post graduate advanced professional diploma program in
furniture and spatial design
49
Source: KPMG in India analysis
? Most players provide training to their workforce in-house at the time of
induction into the organization.
? The training in most cases is provided only for a maximum period of a week
and that too based on need.
? The tradition of fathers passing on skills to their progeny is slowly dying out as
youth is not inclined to enter this sector due to plentiful employment options in
other sectors characterized by relatively ease of work and better pay scales.
? Training needs again are more on machine operation, safety and retail skills.
Automation is leading to de-skilling and the employers are not worried about
skill of floor employees. In their opinion, no pre-requisites are needed for
anyone to become a floor employee.
? Real concern according to them is the skill set of technical people like
production managers, designers, etc.
? Types of institutes/ training providers :
? One that provides general training for the sector
? In house training by leading industry players
? Government ITIs /NGO run skilling schemes
? Primarily, trainings for entry level resources (trainees) are undertaken in-house
by employers .
? There is no standard course or certification that is offered by any institute.
? Some institutes are run in collaboration with multi lateral organizations. An
example is the Karnataka German Multi Skill Development Centre
? There are very few ITI courses focusing on furniture and furnishings and
patronage is insignificant.
? The sector does not have a sector skill council or a standard nos. Thus, deciding
on course structure and the needed infrastructure like machines and tools are
difficult to estimate.
? On the whole, the attractiveness of the sector as an employer is low
? Being a largely unorganized sector, job role delineation is very narrow. For
example, a carpenter will be involved in all aspects of manufacturing a furniture.
50
Source: KPMG in India analysis
Furniture as a business in India is largely carried forward as a family venture. This
tradition of fathers passing on skills to their progeny is slowly dying out as the
younger generation is not inclined to enter this sector due to plentiful employment
options in other sectors that is characterized by relative ease of work and better pay
scales, people’s preference towards a career in the sector is waning.
Many view the occupation as just a job and don’t see a career in it. This is mainly
due to the unorganised nature of the sector and lack of defined career progression.
There is an overall lack of awareness on entitlements and career progression
amongst the workforce especially at the floor level. This is largely due to undefined
job roles and lack of NOS for the sector.
? Types of institutes/ training providers :
? One that provides general training for the sector
? In house training by leading industry players
? Government ITIs /NGO run skilling schemes
? Primarily, trainings for entry level resources (trainees) are undertaken in-house
by employers.
? There is no dedicated course offered for furniture industry.
? Some institutes are run in collaboration with multi lateral organizations. An
example is the Karnataka German Multi Skill Development Centre.
? There are very few ITI courses focusing on furniture and furnishings and
patronage is insignificant.
? The sector does not have a Sector Skill Council or a standard NOS. Thus,
deciding on course structure and the needed infrastructure like machines and
tools are difficult to estimate.
? People from rural areas often do not see merit in migrating to cities where the
cost of living is high and dignity of labour is absent.
? Further schemes such as the NREGA have disincentivised people from
migrating to cities or taking up other low paying jobs.
52
? On the basis of the research done it has been
observed that training provided in the furniture and
furnishing sector does not match industry
requirements. As a result, there is more time and
cost involved in training new recruits.
? There was lack of collaboration between industry
and individual companies R&D efforts.
? Research and development has to be a focus area,
hence there is a need for sector-academia
collaboration as well as individual R&D efforts by
companies.
? With large part of sector being unorganized, Service
tax is considered higher for unorganized segment to
bear.
? VAT introduction is a hindrance for trade within
India.
? Due to technological advancements in this sector
complex machinery from foreign countries are being
used, however the local labour in this industry does
not possess the required skill to operate such
machinery.
? Collaborative training should be encouraged in the
sector. Due to increased automation, machine
operation is driving production in the organised sector.
Machines are mostly imported and thus operating
them needs specialised guidance. Investment on such
machines for training purposes could be unviable given
the rapidly evolving technologies. Thus, having foreign
partners to run training programs can result in
effective and efficient knowledge sharing. More
initiatives like the Karnataka German Multi Skill
Development Centre should be encouraged and
initiated across the country
? The Government of India presently allows duty free
import of furniture for all the SEZs and STPIs. A sales
tax of 14.5% is being imposed for transactions with
local players. This incentives import rather than local
buying, which is affecting the sector growth.
Revisiting this tax policy will help local business
53
? Very few institutes have dedicated course for
furniture industry.
? No standard parameters for quality check are
available in Indian furniture industry. Thus, there is
no clear delineation of job roles.
? Lack of parameters or certifying agencies are
resulting into no check on standards in
manufacturing, wage rates, working environment
etc.
? At present there are no standards in the sector
against which production quality can be
benchmarked. Also, there is no standard authority to
issue certificates for any training course. These need
to be developed if the sector is to gain patronage by
the potential workforce
? Furniture is no longer a luxury good as it is needed
by every household. Currently the Government has
classified the furniture sector as luxury sector
charging a VAT of 14.5%.
? People in furniture industry do not have minimum
wage rate that why they are getting under paid
because of which youth aspirations are going
down.
? Hence, if we want to encourage employment in the
industry we should have minimum wage rate norms
so that industry can provide minimum wage rate
guarantee while seeking job opportunity.
? Minimum wage rate policy should be revised. As it is
discouraging labor to use their skills efficiently.
? It should be considered as a necessity good and VAT
should be reduced for this sector.
doc_611775215.pdf
NSSO employment data gives the total employment figures for the sector. Thus, the numbers are inclusive of the unorganised sector employment figures as well. According to its 68th Round, 50% of the total employment in furniture manufacturing is concentrated in the five states of West Bengal, Uttar Pradesh, Maharashtra, Bihar and Gujarat. West Bengal, UP and Maharashtra alone account for nearly 38% of the work force.
? Demand for furniture in India surged at
12% annual rate over 2007-2012, and in
2013 it increased at a rate of 15%.
? The market is moving more towards
organised segment. This is marked by
increasing customer preference for
readymade, branded furniture.
? Preference is tilting towards high-end, low
maintenance, quickly installable products,
with customisation options.
? Simple, contemporary designs are preferred
over heavy, complex traditional furniture.
Sources: Furniture in India, October 2013, Euro monitor
784
878
983
1101
1267
2216
2009 2010 2011 2012 2013 2017
I
n
R
s
.
B
i
l
l
i
o
n
?
?
?
?
? Youth aspiration to enter this sector is low and existing workforce is looking at other sector/ opportunities for better
wages and facilities.
? Sector doesn’t offer competitive wages compared to other employment options such as- Drivers or self employment
opportunities
? In India absolute consumption is very high. However, Per capita consumption is low as compare to other countries,
largely due to huge income disparity. However with rise in middle class segment, trend is moving towards achieving
high per capita consumption in future.
? Raw material is available only in limited states. It leads to manufacturers purchasing raw material from other states,
paying transport & carriage apart from other charges. It results to higher raw material cost increasing their
manufacturing cost.
? While a large amount of manufacturing activity takes place in unorganized sector, market is slowly moving towards
technology advancement with growing number of organized players stepping-in. As unorganized segment is having a
major share in Furniture and Furnishings sector, therefore their products are not competitive enough in the domestic
as well as Global market.
? As per an ASSOCHAMreport, there are total 1,419 registered furniture factories. However, only 1,157 factories were
under operation as of 2011-12 i.e. about 20 per cent of registered furniture factories in India were non-operational
due to labor dogs & lack of modernization
?
?
?
?
ii
355,124 16.58%
238,544 11.14%
203,124 9.49%
150,996 7.05%
138,213
6.45%
137,156
6.41%
122,181
5.71%
117,997
5.51%
104,121
4.86%
94,117
4.40%
83,652
3.91%
82,592
3.86%
73,238
3.42%
55,643
2.60%
184,663
8.62%
NSSO employment data gives the total employment figures for the sector. Thus, the numbers are inclusive of the
unorganised sector employment figures as well. According to its 68
th
Round, 50% of the total employment in furniture
manufacturing is concentrated in the five states of West Bengal, Uttar Pradesh, Maharashtra, Bihar and Gujarat. West
Bengal, UP and Maharashtra alone account for nearly 38%of the work force.
About 97% of the workforce involved in furniture sector are school drop outs. Of this, 88% have an education
qualification of secondary education or less.
In the organized furniture segment, workers account for more than half of the total workforce. Managerial and
supervisors account for 10% of the total workforce and contractor workers account for nearly 25 percent of the total
workforce.
Source: NSSO 68th Round, KPMG in India Analysis, ASSOCHAM
High Low
iii
Source: Primary Interactions, NSSO 68
th
Round of EU Survey, KPMG Analysis
Source: Primary Interactions, KPMG Analysis
The sector currently employs over 4.11 million employees and is slated to employ more than 11.29 million employees by 2022.
This implies additional creation of ~7.2 million jobs in the 9 year period.
The period 2017-22 will see a higher growth in employment vis-a-vis 2013-17 due to expected changes in consumer
preferences and penetration of organized furnishing services in tier-I and tier-II towns.
An analysis of the breakup of workforce across organized and unorganized segments indicates that the share of organized
employment would increase from 5% in 2013 to 13% by 2022
2.16 3.39 5.95 1.24 2.56
0.29 0.40 0.61 0.12 0.20
1.67 2.60 4.73 0.93 2.13
Organized
13%
Unorganized
87%
2022
Organized
5%
Unorganized
95%
2013
iv
Carpenter
379 91 7088 1904
Cane, willow, bamboo work
1 1 32 16
Fitter
1731 8650 55040 293792
Interior decorating and designing
32 36 704 896
Machinist
441 84 17984 2160
Mechanic machine tool maintenance
70 6 1680 144
Operator advanced machine tool
4 1 0 0
Upholsterer
1 0 16 0
Upholster
3 2 48 32
Aside these institutes, electrical engineers from various colleges are hired in the lighting industry. Also, IITs and NITs
offer course on interior designing.
Source: Directorate General of Employment & Training, KPMG Analysis
National Institute of
Design (NID)
Ahmedabad
? 4 year graduate diploma in design
? 2.5 year post graduate diploma in design.
Indian Institute of Crafts
and Design (IICD)
Jaipur
2 year Post Graduate Diploma in Craft Design with Hard Material
Specialization
MIT School of Energy
and Lighting
Pune
2 year course of Lighting including Illumination Engineering incorporating the
art, science and technology of lighting
Srishti School of Art,
Design and Technology
Bangalore
? 3 year professional diploma program program in furniture and spatial
design
? 2 year post graduate advanced professional diploma program in furniture
and spatial design
? Labor is easily available in Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Orissa, Maharashtra.
? People in these states have no alternative employment opportunity and as they are minimally skilled, they find furniture &
furnishing sector attractive.
? Youth aspirations for employment in the sector across demand clusters is low considering that these geographies are
metro, tier 1and tier 2 cities with better employment prospects in other manufacturing/services segments.
v
Focus on Research and development ? Research and development has to be a focus area, hence there is a need for
sector-academia collaboration as well as individual R&D efforts by companies.
Liberalize Tax Policy ? The Government of India presently allows duty free import of furniture for all
the SEZs and STPIs. A sales tax of 14.5% is being imposed for transactions
with local players. This incentives import rather than local buying, which is
affecting the sector growth. Revisiting this tax policy will help local business
To Design Course Content in
Alignment with Global Trends
? Collaborative training should be encouraged in the sector. Due to increased
automation, machine operation is driving production in the organised sector.
Machines are mostly imported and thus operating them needs specialised
guidance. Investment on such machines for training purposes could be
unviable given the rapidly evolving technologies. Thus, having foreign partners
to run training programs can result in effective and efficient knowledge
sharing. More initiatives like the Karnataka German Multi Skill Development
Centre should be encouraged and initiated across the country
Standards in Quality and
Certifications
? At present there are no standards in the sector against which production
quality can be benchmarked. Also, there is no standard authority to issue
certificates for any training course. These need to be developed if the sector is
to gain patronage by the potential workforce
Shift to Necessity sector ? It should be considered as a necessity good and VAT should be reduced for this
sector.
Minimum wage rate policy ? Minimum wage rate policy should be revised. As it is discouraging labor to use
their skills efficiently.
vi
S. No Section Page
1. Context and approach 4
2. Industry classification 6
2.1 Furniture 7
2.2 Furnishings 9
3. Industry overview 12
3.1 Industry Size, Growth trends 13
3.2 Government policies 16
3.3 Key Trends and growth drivers 19
3.4 SWOT analysis 23
4. Overview of key industry segments 24
4.1 Key segments in Furniture Industry 25
4.2 Key segments in Furnishings Industry 26
5. Geographical clusters 34
6. Demographic characteristics of workforce 36
7. Incremental human resource requirement (2013-17, 2017-22) and skill gaps 40
8. Training Infrastructure 46
9. Recommendations for stakeholders 51
3
Annual Survey of Industries
National Skill Development Corporation
Compounded Average Growth Rate
National Industry Classification
National Sample Survey Organization
Micro, Small & Medium Enterprises
Customer Relations Manager
Compact Fluorescent lamp
Light Emitting Diodes
Industrial Training Institutes
Center For Industrial Studies
National Occupation Standards
Sector Skill Council
Special Economic Zones
Labor Management Information System
Mahatma Gandhi National Rural Employment Guarantee Act
The Associated Chambers of Commerce and Industry of India
Ingvar Kamprad, Elmtaryd and Agunnaryd
incandescent lamp
Bureau of Energy Efficiency
Wal-mart stores inc.
carrefour SA
Association of Furniture Manufacturers of India
Singapore Furniture Industries Council
India International Furniture Fair
National Institute of Design
Indian Institute of Crafts and Design
Foreign Direct Investment
5
NSDC had conducted sector-wise skill gap studies for 19 high priority sectors in 2008–09 .
? KPMG has been engaged as a consultant to help evaluate the skill gap across 25 sectors and
develop actionable recommendations for its stakeholders.
? Mandate includes sector and sub-sector level analysis, demand-supply projection, estimation of
incremental man-power requirement between 2013-2017 and 2017-2022, identification of key-
employment clusters, and SWOT analysis of each sector
? Study also aims to take qualitative insights from stakeholders on enablers and challenges for
each sector, way forward in terms of specific policy level actionable recommendations
? Study led by industry – Sector Skill Councils and a panel of professionals from different sub-
sectors were consulted for their inputs on industry trends, key takeaways in terms of skill
requirement, qualitative insights to understand specific interventions required for each sector
and to validate the quantitative results and recommendations
? 6 sectors were added to the list of NSDC priority sectors for studying the skill gaps
Updated study also includes
? Identification of top 20 job-roles in each sector, case studies around good training practices, sub-
sector level indicators and growth factors
? Study also includes understanding of existing training infrastructure, work-force characteristics
and employment clusters,
? Macro economic factors, central and state governments policies and their envisaged impact
? Synchronisation of the sector wise demand from the district level skill gap studies
? Recommendations for key stakeholders - Industry, NSDC, Training organizations and Government
? Environment scans every year till 2015-16 including SWOT analysis for the sector
7
3100: manufacture of
furniture
This class includes manufacture of furniture of any kind, any material (except stone,
concrete or ceramic) for any place and various purposes
31001 Manufacture of furniture made of wood
31002 Manufacture of furniture made of cane & reed
31003 Manufacture of furniture primarily of metal
31004 Manufacture of furniture primarily of plastic
31005 Manufacture of mattresses and pillows
31009 Manufacture of other furniture
Source: National Industrial Classification 2008, Central Statistical Organisation, Ministry of Statistics and Programme Implementation, GOI
2219 : Manufacture of
other rubber products
22191 Manufacture of rubber plates, sheets, strips, rods, tubes, pipes, hoses and
profile -shapes etc.
22192 Manufacture of rubber conveyor or transmission belts or belting
2396 : Cutting, shaping
and finishing of stone
This class includes cutting, shaping and finishing of stone for use in
construction, in cemeteries, on roads, as roofing etc.
23960 Cutting, shaping and finishing of stone
2817 : Manufacture of
office machinery and
equipment
This class includes manufacture of white boards
and marker boards
4659 : Wholesale of
other machinery and
equipment
46591 Wholesale of office machinery and equipment, except computers and
computer peripheral equipment
4759 47591 Retail sale of household furniture
8
Sources: KPMG in India Analysis, NIC 2008
The processes used in the manufacturing of furniture are standard methods of receiving material, cutting & moulding,
component fabrication, assembly, finishing & packaging. The design of the article, for both aesthetic and functional
qualities, is an important aspect of the production process.
Some of the processes used in furniture manufacturing are similar to processes that are used in other segments of
manufacturing. For example, cutting and assembly occurs in the production of wood trusses is the same as in general
manufacturing of wood product. However, the multiple processes distinguish wood furniture manufacturing from wood
product manufacturing.
Similarly, metal furniture manufacturing uses techniques that are also employed in the manufacturing of roll-formed
products. The moulding process for plastics furniture is similar to the moulding of other plastics products.
Furniture manufacturers use channels like Direct Sale, Wholesale, Retail. Now manufacturers are adopting Hybrid model
( Brick Motor and e-retailing). E-retailing is a new concept but is becoming popular these days.
Raw material
procurement (wood,
metal, cane & reed,
plastic)
Processing
Assembling
Finishing
Designing furniture for
Home
Office
Contract
Direct Sale
Wholesale
Retail(brick & motor, e-
tailing)
9
10
9524 Repair of furniture
and home furnishings
95240 Repair of furniture and home furnishings
4330 Building completion
and finishing
43301 Installation of doors, windows, door and window frames, fitted kitchens of wood or
other materials
43302 Interior completion such as ceilings, wooden wall coverings, movable partitions etc.
; Laying of parquet and other wood floor coverings, carpets
and linoleum, wallpaper; tiling with ceramic, concrete or cut stone ceramic
etc.
43303 Interior and exterior painting, glazing, plastering and decorating of buildings ( does
this mean interior decoration)
or civil engineering structures
43309 Other building completion and finishing
Source: National Industrial Classification 2008, Central Statistical Organisation, Ministry of Statistics and Programme Implementation, GOI
11
Sources: KPMG in India Analysis, NIC 2008
? Interior completion such as ceilings, wooden wall coverings, movable partitions etc. , laying of parquet and other
wood floor coverings, carpets and linoleum, wallpaper; tiling with ceramic, concrete or cut stone ceramic.
? Interior and exterior painting, glazing, plastering and decorating of buildings ( does this mean interior decoration) or
civil engineering structures.
? Installation of doors, windows, door and window frames, fitted kitchens of wood or other materials
? Repair of furniture and home furnishings.
.
Furnishing Manufacturing has already been included in other sector report that is why we are not including
manufacturing into our report here. Sales and installation has been taken together because majority of player plays
both the activities together.
13
? Demand for furniture in India surged at 12% annual rate over 2007-2012, and in 2013 it increased at a rate of
15%.
? The market is moving more towards organised segment. This is marked by increasing customer preference
for readymade, branded furniture.
? Preference is tilting towards high-end, low maintenance, quickly installable products, with customisation
options.
? Simple, contemporary designs are preferred over heavy, complex traditional furniture.
Sources: Furniture in India, October 2013, Euro monitor
Home furniture is the largest segment in the
Indian furniture market, accounting for about 65
percent of sales.
784
878
983
1101
1267
2216
2009 2010 2011 2012 2013 2017
R
s
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l
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n
Bed room
40%
Living
15%
Kitchen
10%
Work Station
20%
Storage
7%
Seating
8%
Source: KPMG India Analysis , April 2014
14
Top five countries from which India imported furniture in 2012 were China, Germany, Malaysia, Italy, and the China
largely dominates the furniture imports into India followed by Germany, Malaysia, United States of America, Italy and
the US.
:
? The demand for branded furniture has increased in India due to the emerging upper and middle class urban
population.
? Although demand for local artisan furniture still exists, the growth is in imports as Indians seek contemporary
designs in a modern world.
? The reduction in import tariffs has also driven the growth of imported furniture. All these factors provide a very
favourable environment for those importers interested in importing furniture to India.
? Import products are Bedding, Mattresses, Mattresses supports, Cushions & similar stuffed furnishing, lamps &
lighting fitting.
Import of Furniture in India received a boost in 1998, when importers no longer required a license or special permission
to import to India. By 2000, the India government allowed foreigners to invest 100% in local furniture manufacturing.
This policy enticed companies such as Sauder and Herman Miller (US), Lista (Switzerland), and Gautier (France) to enter
the India market.
For the period 2008-13, furniture imports grew at a CAGR of 17%. The share of total furniture and furnishings import in
total Indian imports was 0.2%in 2012.
JNPT accounted for 39% of Import followed by Delhi TKD ICD and Bangalore ICD which account for 18% and 11% of
imports respectively.
Average value per shipment of Furniture imports in India is USD 608,948
Source: Selected Statistics of foreign trade of India
China
54%
Germany
12%
Malaysia
8%
Italy
7%
UK
3%
USA
3%
Thailand
2%
Hong Kong
2%
Srilanka
2%
Others
7%
15
.
India is taking various initiatives to increase furniture export market. For this Indian Govt. has requested Bhutan to
remove restrictions imposed on import of furniture in Bhutan.
India has potential to make forest produce like wood and paper as major foreign exchange earner and UN’s Food and
Agricultural Organization (FAO) is ready to extend knowledge and technological assistance for the same , a top FAO
official said.
FAO official said in a meet that through sustainable afforestation policy India could transform its forest wealth a major
commercial venture.
India and China have signed a memorandum of understanding for promotion of exports of Indian handicrafts. The MOU
will focus on promotion of exports of products such as ethnic and contemporary furniture, wooden handicrafts
including furniture from Jodhpur and Saharanpur, imitation jewellery and fashion jewellery and art metal ware from
Moradabad.
Source: Selected Statistics of foreign trade of India
India is exporting maximum share of furniture to United States and United Kingdom accounting for 47% of total
export. However, from US and UK, India is importing only 5%of total imports.
India is importing maximum share form China and Germany accounting for 66% of total import. However, India is not
exporting furniture to China.
Mundra accounted for 37% of export followed by Delhi TKD ICO and JNPT which accounted for 18% and 10% of
imports respectively. Average value per shipment of Furniture exports in India is USD 250,522.
US
36%
UK
11%
Germany
8%
N/A
7%
France
6%
Netherland
4%
Australia
3%
Canada
2%
Belgium
2%
Others
21%
16
? Encouraging foreign direct investment, especially in areas which create jobs and provide technological advancement
? Passed regulations that allowed single-brand companies such as Ikea to open outlets without local partners.
? Allowed foreign multi-brand retailers such as wal-mart stores inc. (WMT) and carrefour SA (CA) to own as much as 51
percent of retail outlets
? Imports of furniture were liberalized in April 1998
? Importers in India require no license or prior permission to import furniture.
? Importers should have valid IEC (Import Export Code) issued by Directorate General of Foreign Trade.
Impact
? Import policy is leading to excessive competition in the industry.
? Many manufacturing units are shutting down as readymade products can be easily imported. Therefore, Organized
segment is coming into retailing rather than manufacturing the products.
? Unemployment has increased as manufacturing plants are decreasing.
? Furniture imports into India have to pass through the procedure of Customs clearance as they cross the Indian
border.
? The importers need to present Originals of Commercial invoice, packing List, Certificate of Origin, and Bill of
Lading.
? Basic Custom Duty (15 per cent) + 2 per cent Education Cess)
? Packages should comply with Import Policy provisions as laid down in The Policy circular 44 (RE 2000)/1997-2002
DT24th November, 2000.
? Each unit package should carry the following details:
(a) Name and address of the importer;
(b) Common name of the commodity packed;
(c) Net quantity in terms of standard unit of weights and measures
(d) Month and year of packing in which the commodity is manufactured or packed or imported.
1 2 3 4
Import Policy
Customs Clearance(1962)
Duty
Packaging
Source: Planning Commission Reports, KPMG Analysis
17
FDI In Retail IKEA to invest Rs. 10,500 Crore in India.
? Proposal cleared in May 2013. IKEA has identified Haryana, Andhra Pradesh,
Maharashtra and Karnataka to set up its single brand retail stores as part of the
investment.
? The firm has also proposed setting up 10 furnishing and home ware stores as well
as allied infrastructure. It also plans to open 15 more stores in over 10 years in
India.
Hettich announced in September 2013 that it would invest Rs. 500 Crore in India over 5
years.
? The German company, which established operations in India by setting up a 50:50
joint venture with the Saroj Poddar Group in 2000, has launched its Vadodara
facility, set up at an investment of Rs 100 crore.
? The company expects to export 40% of its production from the Vadodara plant by
2016.
NCPL - Casa Shamuzzi
Agreement
Noida-based developer NCPL entered into a licensing and marketing arrangement with
Italian furnishing brand Casa Shamuzzi in January 2013.
Casa Décor Expansion Plans In October 2013, Casa Décor, a joint venture of luxury furniture retailer Poltrona Frau
and Tata Group indicated that it is looking at scaling up its business in the high end
furniture retailing segment for home, offices and hospitality sector.
FDI in Retail In November 2011, India's central government announced retail reforms for both multi-
brand stores and single-brand stores. FDI in single brand retail stores was allowed to
be 100%while for multi-brand, the limit was increased to 51%. This has paved way for
big foreign furniture retailers like IKEA, Hettich to invest in India. This is a major step in
promoting competition and opening up of retail space in India.
Source: KPMG Analysis
18
Source: KPMG Analysis
FDI In Retail Panasonic submits application to set up single brand retail stores for lighting products (Feb 2014)
? Submits application jointly with it’s fully owned Indian subsidiary Anchor Electricals for setting
up company owned stores exclusively for Panasonic branded LED light fixtures and other
lighting décor products
? Currently it has set up an exclusive LED lighting centre in Mumbai. Plans to roll out similar
centres in Bangalore, Delhi, Chennai and Hyderabad.
Philips Research
Facility Expansion
Philips India in Nov 2013 announced expansion of its research and development facilities for
lighting in India.
? Philips has a lighting innovation centre in Noida.
? The company has so far invested $15 million in its Noida innovation facility.
Actis-Halonix
Acquisition
Private equity firm Actis, through its affiliates Argon South Asia Ltd and Argon India Ltd, has
bought the general lighting business of Halonix Ltd for an enterprise value of Rs160 crore, as per a
stock market disclosure in Sept 2013.
Sahasra
Electronics
Investment
In June 2013, Government of India cleared the Rs.11.1 crore investment proposal by Sahasra
Electronics for manufacturing LED lights in Noida as part of the National Policy on Electronics.
Bachat Lamp Yojna The Bachat Lamp Yojana Programme of Activities (PoA) is a scheme developed by BEE to promote
energy efficient lighting in India. Under the BLY scheme quality long-life CFLs would be
distributed by SSC-CPA implementer(s) to grid-connected residential households in exchange of
an incandescent lamp (ICL) for Rs15. Once the CFLs have reached their end of life or any CFLs
which have failed prematurely during the project period, the SSC-CPA implementer(s) would
arrange for the collection and disposal of CFLs as per applicable environmental norms.
National Policy on
Electronics 2012
The objective is to create a globally competitive electronics design and manufacturing industry to
meet the country’s needs and serve the international market.
Goals for 2020:
? Attract an investment of USD 100 billion
? Reach a turnover of USD 400 billion
? Create an employment of 28 million
? Enhance exports fromUSD 8 billion to USD 80 billion
? Grow the chip design/ embedded software industry to USD 55 billion
Lower Excise duty
on LED lights
In 2011 budget, excise duty on LED bulbs was lowered from 10%to 5%and full exemption on the
special CVD of 4%was proposed.
19
•Youth aspiration to enter this sector is low and existing workforce is looking at other sector/
opportunities for better wages and facilities.
•Sector doesn’t offer competitive wages compared to other employment options such as- Drivers or
self employment opportunities
•In India absolute consumption is very high. However, Per capita consumption is low as compare to
other countries, largely due to huge income disparity. However with rise in middle class segment,
trend is moving towards achieving high per capita consumption in future.
•In India raw material is available only in limited states. It leads to manufacturers purchasing raw
material from other states, paying transport & carriage apart from other charges. It results to
higher raw material cost increasing their manufacturing cost.
While a large amount of manufacturing activity takes place in unorganized sector, market is slowly
moving towards technology advancement with growing number of organized players stepping-in. As
unorganized segment is having a major share in Furniture and Furnishings sector, therefore their products
are not competitive enough in the domestic as well as Global market.
As per an ASSOCHAM report, there are total 1,419 registered furniture factories. However, only 1,157
factories were under operation as of 2011-12 i.e. about 20 per cent of registered furniture factories in
India were non-operational due to labor dogs & lack of modernization
Source: KPMG India, ASSOCHAM
20
Recruiting labour is considered a huge challenge. Two main reasons attached to it are:
? Attraction towards white collared jobs
? Government policies like the MGNREGA where people get short term
employment for attractive wages. This has affected migrant labour especially.
? Sector is also not considered higher in social status leading to youth not willing
to join the workforce
? There are no industry standards for furniture manufacturing at the moment.
? he sector does not have an Sector Skill Council and any training standards at the
moment
? Very few institutes have dedicated course for furniture industry.
? No standard parameters for quality check are available in Indian furniture
industry. Thus, there is no clear delineation of job roles.
? Lack of parameters or certifying agencies are resulting into no check on standards
in manufacturing, wage rates, working environment etc.
? Automation is leading to de-skilling. This means people need to be trained in
machine operations mainly.
? Real concern is the skill set of technical people like production managers,
designers, etc.
? With large part of sector being unorganized, Service tax is considered higher for
unorganized segment to bear.
? VAT introduction is a hindrance for trade within India.
? Policies on procuring raw material is not conducive for industry and benefits are
limited to few players/regions.
? Cartage problem is faced due to availability of raw material in some states only.
? There is a lack of incentive for unorganized segment to adopt newer technology.
Source: Industry Interaction
21
Private final consumption expenditure on furniture and furnishings has grown at a CAGR of
9.51% between 2004-05 and 2010-11. Revival in real estate and hospitality sectors
combined with rising disposable incomes will further drive the furniture industry’s growth
in India
Incandescent bulbs are being replaced by CFLs and this has indirectly resulted in increased
production of CFLs. The size of the CFL market in 2009 pegged at 230 million units and is
expected to exceed 400 million units by the year 2014.
Consumer preference is changing directly with their purchasing power. The purchasing
power of Indian consumer has made it possible for the real estate developers and interior
decorator to build apartments and home fitted with super high end services like, spa,
sauna, Jacuzzi. (ANI)
Segments like Modular kitchen, Glass glazing, false ceiling, wall tiles, wallpaper, interior
designing are the emerging segments. These are the reason for expansion of the sector.
Sources: KPMG in India analysis
22
Source: KPMG in India analysis
? Most businesses are now operating a hybrid business model where
traditional stores are managed along side online sales.
? Businesses are moving from dealership to franchisee models for increased
penetration.
? This helps the business build its brand value and also at the same time
gives it a lot of visibility.
? Consumers are increasingly preferring high-end, low maintenance, quickly
installable products, with customization options to cater for the specific need.
? The business is becoming more customer centric with more people opting for
smartly designed furniture with a stress on functionality.
? People are becoming more brand conscious and they are increasingly demanding
premium branded products.
? This has been a critical factor in driving the demand for both furniture and
furnishings.
? Incandescent lamps, the most energy inefficient technology, are being replaced
by energy efficient CFLs and LEDs.
? LED and CFL are expected to grow at a higher rate.
? Some state Governments in India like the Government of Tamil Nadu and
Karnataka have banned the use of incandescent lamps in government offices.
23
? Economical production cost
? Increasing demand for simple, clean designs
? Excellent outsourcing facilities
? Increasing share of the organised segment
? Evolving efficient supply chain management
? Better process control and storage facilities
? Better information availability to both the consumers and the producers
? Improved business climate and infrastructure facilities
? Highly unorganised and fragmented sector
? Piece driven industry that operates on demand
? Since the industry is highly fragmented, and lacks direct market exposure, workers not equipped
properly
? Poor supply chain management system
? Poor stock control facilities
? Slow absorption of innovation change
? Lack of skilled manpower
? India is still a net importer of furniture
? Absence of Sector Skill Council for the sector
? No standards available for industry to benchmark production
? No nodal body for certification available
? No known skill initiatives focused on the sector
? Expanding middle income group with larger pockets that drive demand
? Huge opportunity in Design space and also in emerging market segment in services
? Huge unexplored retail space available for the industry to foray into
? Huge unpenetrated rural market
? Low labour costs
? Unexploited research and development capability
? Design space opening up due to change in consumer preferences and awareness
? Hybrid business models offer scope for business expansion
? Wooden furniture has the single largest market in India. With more policies aimed at protecting
the environment being tabled, there may be limitations imposed sourcing wood from domestic
forests.
? Organised retailing in furniture is relatively new in India and local firms could suffer due to the
new FDI rules which will bring in established foreign players into the foray.
? Large variations in stock control owing to new production methods
? Highly bureaucratic and unreliable business environment
? Unfavourable Government tax policies promoting imports
? Local firms could suffer due to the new FDI rules which will bring in established foreign players
into the foray
Sources: KPMG in India analysis
25
Source: KPMG in India Analysis
Residential ? Dining and Living
? Bedroom
? Kitchen
? Storage
Office ? Desk Operatives
? Storage
? Lounge
Hotels Beds, dressers, wardrobes, bars, tables, panelling
blinds, bed treatments, lighting
Hospital/Nursing homes Beds, chairs, tables, lighting, bed treatment
Educational Institutes Schools and College
Retail Shelves, counters, tables, chairs, desks, lighting
Restaurant and Public Houses Bar stools, tables, chairs, lighting
Wood ? Sheesham
? Teak
? Rosewood
? Particle wood
? Mango
? Plywood
Metal ? Stainless steel
? Aluminum
? Iron
Plastic
Cane & Reed
? Rapid urbanization, changes in socio-economic structure, greater awareness among consumers about wood
coatings, increased activity in construction and furniture are expected to influence the demand for adhesives,
epoxies and wood coatings in India.
? Woodworking adhesives and wood finishes use is driven by the growth of the Furniture industry in India
? Key states for wood furniture: Gujarat, UP, Punjab, Kerala, Andhra Pradesh, West Bengal
26
? Interior completion such as ceilings, wooden wall coverings, movable partitions etc. , laying of parquet and other
wood floor coverings, carpets and linoleum, wallpaper; tiling with ceramic, concrete or cut stone ceramic.
? Installation of doors, windows, door and window frames, fitted kitchens of wood or other materials.
? Interior and exterior painting, glazing, plastering and decorating.
? Repair of furniture and home furnishings.
While Indian home furnishing industry has a place of its own, it faces stiff competition from China. Though China is
clearly the leading exporter in the world of home furnishings, it is not a direct competitor to India because it mainly
uses man-made fibers and caters to mass markets whereas India produces natural fibers and serves niche markets.
27
Lighting sales grew at a CAGR of 11.5% between 2007 and 2012 and in 2013 grew at a CAGR of 5.1% .
Expected to grow at CAGR of 5.1% till 2017.Per capita consumption of lighting is low in India and thus
potential for growth is high.
Lighting will get a boost due to transition from
bulbs to CFL and LED lamps. Transition is being
made to CFLs and LEDs from incandescent lamps
as a measure of energy efficient lighting.
Incandescent lamps, however, will not disappear
altogether as consumers in small towns and rural
areas prefer these over CFL lamps due to price-
related issues. CFLs and LED demand will grow at
a high rate in future.
18.2
20.3
22.7
25.9
28.9
31.4
33.0
40.2
2007 2008 2009 2010 2011 2012 2013 2017
I
N
R
b
i
l
l
i
o
n
HID
28%
Halogen
7%
Incandescent
6%
LED
6%
CFL
12%
LFL
13%
HID
28%
*High Intensity discharge
Source: KPMG Analysis, March 2014
28
Solid Vinyl’s
Poly Vinyl foam
Silk
Viscose
Natural
? Sales of wall art prints and posters have risen in India as people are quite attracted towards the western style of
painting as well as photography which are made available in prints format on paper.
? Wallpaper is manufactured mainly in Delhi, Uttarakhand, Ambala, Gujarat, Maharashtra, West Bengal, Hyderabad,
Ahmedabad, Chennai, Naraina, Tamil Nadu, Karnataka, Rajasthan and Uttar Pradesh.
? Online art stores have also risen in the past that sell various forms of art prints, posters as well custom framed art
online in India.
? Today, vibrant colours are preferred over soft hues of whites and off-whites. They bring life to your interiors. Colours
like lemon yellow, deep orange, bright maroon and others are in vogue.
Thus with the rise of internet and retail formats, people in India have been very much receptive to buy art and decorate
their homes in a modern way.
? People who are looking for timesaving and convenience prefer wallpapers.
? It is also useful to those who have breathing and asthma, skin and allergy problems.
? Wallpapering can be done in just eight hours whereas painting takes 12 to 15 days.
? P.V.F. Wallpapers are fire retardant, tear sponge washable, heat resistant (thereby maintaining a steady room
temperature), odourless, noise-absorbing and clean and quick to install.
? Budgeting for good quality paint and wallpaper is almost the same, but imported wallpapers cost up to Rs.100 per
sq.m. Some special materials also cost up to Rs.200 per sq. ft. or more. They also suit every budget as Indian
wallpapers are available in a range of Rs.11 to Rs.80 per sq. ft. Inclusive of installation at site.
? The replacement becomes very economical, since the entire wall and ceiling does not need to be done again.
29
? With huge untapped potential, India is an enticing market for wall covering manufacturers.
? Demand for ceramic wall tiles is expected to show high growth in the region.
? Europe and Asia-Pacific constitute two of the largest regional markets, as stated by the new market research
report on Wall Coverings.
? In terms of most promising growth potential, Asia-Pacific, backed by China, India, Indonesia, Thailand and others
is the clear winner, and forecast to expand at a CAGR of more than 3.0%through 2015.
30
False Ceilings in India are a relatively new concept but definitely a huge potential market. False ceilings are best
suited ceiling furnishing solutions for a tropical climate like India. The usual problems pertaining to dirt, hygiene
factor, expenses and maintenance are resolved by the use of False Ceiling boards or Tiles.
False ceiling demand is increasing with the increase in Real estate market. All the constructors and interior decorators
use false ceiling to make property attractive to buy.
False ceiling varieties like Grid Ceilings and Minimal Fiber Ceilings are fabricated from Solid PVC foam.
The false ceilings in India are available at various false ceilings supplier stores and retail outlets.
They can be customized depending upon design requirements and customer preference directly by the False Ceilings
Manufacturers in India.
The various advantages of False Ceilings making them
suitable for Indian Homes are:
? Durability
? Light Weight
? Portability
? Waterproof
? Fire Resistant
? Mild Acids and Alkali Resistant
? Unharmed by Fungus or Termites
? Minimal Affect of Harmful Chemicals
? Superior Quality
? Easy Installations
? Inexpensive
31
? The modular kitchen market in India is growing at a rapid rate in the country. The market is expanding as the
demand is no longer restricted to the upper middle class, but is gaining popularity among other socio-economic
classes also.
? According to a new report by RNCOS, the growth in the per capita income of people, coupled with efforts on the
part of organized players to offer services at affordable rates, are some of the factors which are providing a boost to
the modular kitchen demand in the country.
? At an annual growth rate of 40 percent, the business of kitchen appliances is head and shoulder above the IT
industry in the city. Modular appliances, which revolutionised the lives of homemakers with ease and elegance,
mean serious business for the NCR entrepreneur.
? According to a study carried out by web portal people in India are willing to invest an average of Rs2.5 lakh in
modular kitchens with some users willing to spend as much as Rs15 lakh
? The site has received tremendous response and is growing 100% every quarter.
? More than 85% of interest and investments in modern kitchens comes from Top 10 cities: Mumbai, Delhi, Bangalore,
Chennai, Hyderabad, Pune, Kolkata, Ahmedabad, Chandigarh, Jaipur
? ‘Indian’ style modular kitchens are more popular and receive four times the number of visits when compared to
the ‘Italian’ style modular kitchens.
? With emergence of nuclear families, increasing number of housing projects, growth in organized retail and a
changing view on home aesthetics, the modular kitchen market is anticipated to witness growth in the coming years
also.
32
? The Indian glass glazing industry is in the early stages of market development. In the 1990s, most high-end
buildings in various parts of India adopted glazing as a standard technology, especially driven by the IT boom.
? Currently, India’s glass production capacity is relatively low, compared to other developing Nations. Today,
glazing is common in most commercial structures in India, especially in malls, IT facilities and other corporate
buildings.
? Glazing is preferred mainly because it is light-weight and immediately uplifts the appearance of a building. It
requires relatively less maintenance, thereby making it an apt choice for builders.
? The introduction of FDI into the real estate sector has encouraged various international players to enter the
Indian market, thereby paving the way for world class standards of safety and quality in construction. This is
another key factor that is driving the growth of the market to an organised level.
? High growth regions, mainly the western and the southern regions of India, consume majority of the glass used
in glazing. Cities like Mumbai, Pune and Ahmedabad are the major consumers in the western region, and strong
sales force in these cities will assure higher market share.
? Southern cities like Chennai, Hyderabad, Bengaluru and Cochin are witnessing a rapid increase in construction
activities driving the growth for glass glazing in the region.
? Increase in demand for decorative glass with digital prints and adoption of green building techniques are
providing unprecedented opportunities for glass manufacturers in India.
? Construction of dwelling units is increasing and architects are using more glass and value-added glass.
? Greener glasses : The tropical weather conditions in India and the high level of solar radiation
? Gas-filled glazing (insulated glazing (IG), more commonly known as double glazing (or double-pane, and
increasingly triple glazing/pane) are double or triple glass window panes separated by an air or other gas
filled space to reduce heat transfer across a part of the building envelope)
? Coated glass, insulated glass and high-performance glass, are witnessing the emergence of a new breed of
customers, who make a conscious effort to overlook price for the purpose of safety and environment
sustainability.
33
Interior Designing is not new in India. Wonderfully done interiors of the hundreds of monuments and places of
worship across our country for thousands of years are the signs that interior designing exists in India since very long.
All this while, interior designing formed an integral part of its larger discipline, Architecture. However, in the late
1980s, interior designing came to be recognised as a separate discipline and with the liberalization of the economy in
1990, the profession of designing and decorating interiors has grown by leaps and bounds.
It’s scope has widened to include:
? : Private houses, bungalows, condominiums, farmhouses etc.
? : For corporate houses, government buildings.
? : Boutiques, department stores, malls, food and retailing centres.
? : Movies halls, theatres, theme parks, clubs, dramatic and musical theatre.
? : Restaurants, country clubs and hotels.
The key drivers in the growth of interior designing firms in India are:
? Construction boom in all major cities and in most small towns in India.
? The purchasing power of Indian consumer has made it possible for the real estate developers and interior
decorator to build apartments and home fitted with super high end services like, spa, sauna, Jacuzzi.
?
Rising need for professional help to make the limited living and working space more comfortable, beautiful and
practical.
? Rising number of exhibitions and decors in big cities and towns.
35
Srinagar
Kartarpur
Pondicherry
Vijayawada, Macherala
Thrissur,
Malapuram,
Ernakulam,
Taliparamba,
Kollam
Nagpur,
Nashik,
Gadchiroli
Surat, Vadodara,
Jamnagar,
Ahmedabad
Chhatarpur
Shikawati
Kanpur,
Saharanpur,
Lucknow, Bareily
Yamuna Nagar
Delhi
Dehradun
Patna
Beliaghata
Kanpur Steel Furniture UP
Saharanpur Wood Furniture UP
Lucknow Steel Furniture UP
Malappuram Wood Furniture Kerala
Ernakulum Wood Furniture Kerala
Taliparamba Wood Furniture Kerala
Gadchiroli Bamboo Maharashtra
Bareily Cane & Bamboo UP
Beliaghata Lamp West Bengal
Patna GLS Lamps Bihar
States with furniture clusters
Out of 1,419 registered furniture manufacturing units,
Maharashtra is the leading state with 222 registered
furniture factories followed by Tamil Nadu (201),
Rajasthan (124), Andhra Pradesh (119) and Karnataka
(112). The top five registered factories constitute almost
55 per cent of registered furniture factories in India.
Source: ASSOCHAM
37
355,124 16.58%
238,544 11.14%
203,124 9.49%
150,996 7.05%
138,213
6.45%
137,156
6.41%
122,181
5.71%
117,997
5.51%
104,121
4.86%
94,117
4.40%
83,652
3.91%
82,592
3.86%
73,238
3.42%
55,643
2.60%
184,663
8.62%
NSSO employment data gives the total employment figures for the sector. Thus, the numbers are inclusive of the
unorganised sector employment figures as well. According to its 68
th
Round, 50% of the total employment in furniture
manufacturing is concentrated in the five states of West Bengal, Uttar Pradesh, Maharashtra, Bihar and Gujarat. West
Bengal, UP and Maharashtra alone account for nearly 38%of the work force.
Source: NSSO 68th Round, KPMG in India Analysis, ASSOCHAM
High Low
“Registered furniture factories have more potential in terms of employment generation as on an average one registered
furniture factory generates 40 jobs whereas an unorganized factory generates just about three jobs.”
38
Source: NSSO 68th Round, KPMG in India Analysis
Upto Secondary
87%
Higher Secondary
9%
Diploma/Certificate
1%
Graduate
3%
In the organized furniture segment,
workers account for more than half of the
total workforce. Managerial and
supervisors account for 10% of the total
workforce and contractor workers
account for nearly 25 percent of the total
workforce.
Workers directly
employed: Men
51%
Workers directly
employed: Women
2%
Workers employed
through contracters
23%
Employees other
than workers:
supervisory and
managerial
10%
Employeed other
than workers: Oher
employees
13%
Unpaide workers
1%
About 97% of the workforce involved in
furniture sector are school drop outs. Of
this, 88% have an education qualification
of secondary education or less.
Most of the floor level employees have a
qualification of completing school
education or less. Thus, the statistics might
be a pointer that people working on
production floor constitute the largest
share.
People holding a diploma certificate is a
meagre 1% and 3% are graduates. This
4% will mostly be involved in the mid and
higher management.
Source: ASI 2010
39
Source: NSSO, ASSOCHAM
E
Maharashtra
15,100
Rajasthan
15,053
Tamil Nadu
9,318
Karnataka
4,998
AP
4,087
Of over 57,000 jobs being generated by registered furniture factories across India, Maharashtra is Numero Uno in
generating maximum of over 15,100 jobs followed by Rajasthan (15,053), Tamil Nadu (9,318), Karnataka (4,998) and
Andhra Pradesh (4,087) with top five states accounting for about 68 per cent of total employment generated by
registered furniture sector in India
41
Source: Primary Interactions, NSSO 68
th
Round of EU Survey, KPMG Analysis
Source: Primary Interactions, KPMG Analysis
The sector currently employs over 4.11 million employees and is slated to employ more than 11.29 million employees by 2022.
This implies additional creation of ~7.2 million jobs in the 9 year period.
The period 2017-22 will see a higher growth in employment vis-a-vis 2013-17 due to expected changes in consumer
preferences and penetration of organized furnishing services in tier-I and tier-II towns.
An analysis of the breakup of workforce across organized and unorganized segments indicates that the share of organized
employment would increase from 5% in 2013 to 13% by 2022
2.16 3.39 5.95 1.24 2.56
0.29 0.40 0.61 0.12 0.20
1.67 2.60 4.73 0.93 2.13
Organized
13%
Unorganized
87%
Organized
5%
Unorganized
95%
2013
42
Key Functions
(Director, Managers,
Designers, Business Heads, Design
Engineers)
(Carpenters
(experienced) , Supervisors, Engineers,
Procurers, Quality Control Technicians,
Technical Supervisors, Electrical
Engineers)
(Foremen,
Carpenters, Assemblers, Fitters, Painters,
Machine Operators, Field Technicians,
Electrician)
? Workforce of an organization can be broadly
grouped into either of the three categories
based on the level of experience:
? Needs Supervision
? Works Independently
? Manages a Team
? Workforce can either be skilled, semi-skilled
or unskilled. Skilled workers are mostly those
who manages a team, semi-skilled workers
are those who works independently and
unskilled people are those who needs
supervision.
? Education qualification does not play a vital
role in this sector. As floor level employees
are first given on-the-job training and starts
giving results within few days .
? Education qualification is required at upper
level to understand the market, innovation,
guidelines, etc.
Hierarchy
? Back end: Activities that are at the
factory level. Job roles include those
relating to production and supervision
of workers.
? Mid Segment: Activities that are
Related to supply chain management
and logistics
? Front end: Activities that relate to
distribution, sales and services
Procurement
Design
Production
Sales &
distribution
Services
43
Furniture Designer, Interior
Designer, Technical Architect,
Design Engineer
Purchasing Manager
Production Manager, Production
Engineer, Carpenters,
Assemblers, Finishers,
Polishers, Quality check
technicians, Machine operators,
Joiners, Painter, Cabinet Maker,
Furniture Maker, Supervisor and
, Foremen, Electrical supervisor,
Electrical Engineer, Test and
repair technician
Sales and Marketing Manager,
Dispatch Operative
? Knowledge on design trends and competition.
? Understand production capabilities, machines and tools.
? Interact with clients to understand their needs and evaluate
design options.
? Optimize part and product design.
? Knowledge of raw material costs, places for procurement.
? Coordinate with the design and internal production team
before buying the raw materials and machines needed for
production.
? Determine the costs and budget for procurement.
? Understand the production process.
? Ability to work with machines.
? Understanding of design requirements and knowledge on
products.
? Excellent understanding of the technical knowledge of chip
manufacturing, arrays etc.
? Knowledge of the market.
? Effective communication skills.
? Understanding of competitive information related to the
company and its products, pricing, marketing strategy etc.
Source: NCO 2004, ProdSkills UK, KPMG Analysis
Restorer, Fitter, Electrician
? Ability to handle the tools needed for fitting.
? Ability to understand design and knowledge of techniques
of restoration.
? Ability to effectively address the customer complaints and
provide the required services efficiently.
44
Source: KPMG in India analysis
(Foremen,
Carpenters,
Assemblers,
Fitters, Painters,
Machine
Operators, Field
technician,
Electrician, etc.)
? A good understanding of the production
process
? Ability to work with machines
? Ability to understand and read design
requirements competently
? Broad understanding of the industry
dynamics
? Lack of understanding of the industry
dynamics and processes involved.
? Inability to read and/or understand design
requirements.
? Lack of technical knowledge especially
w.r.t electrical light manufacturing.
(Carpenters
(experienced),
Supervisors,
Engineers, Quality
Control
Technicians,
Technical
supervisors,
Electrical Engineer)
? Sound understanding of the production
process
? Excellent communication skills
? Excellent man-management skills
? Strong estimation skills
? Excellent knowledge on product quality
audit skills
? Lack of understanding of the production
process and the capacity handling measure
of the plant.
? Lack of knowledge on comparable cost
options and quality measures.
? Lack of technical knowledge especially
w.r.t electrical light manufacturing.
? Ineffective communication.
? Lack planning and co-ordination of work
among employees.
? Lack man-management skills.
? Lack knowledge of new technologies and
machines.
(Director,
Managers,
Designers,
Business Heads,
Design Engineers)
? A deep understanding of the production
processes of the organization
? Strong knowledge of the market trends
and new technologies in the industry
? Strong knowledge and understanding of
the various National and International
standards relating to the process
? Strong analytical and cost estimation
skills
? Excellent communication skills
? Lack of specific knowledge in the industry
(raw material sourcing options, optimal
production process)
? Lack up-skilling of knowledge in the new
market trends & International practices
? Lack good communication and soft skills
45
Source: Euromonitor 2013, Primary Research, KPMG Analysis
1
2
3
4
5
? With increased exposure
to information and trends,
skilled designers who are
aware of market trends
will be needed.
? Retail skills like CRM,
sales, communication
along with logistics and
supply chain management
will be critical.
? E-retailing is emerging
along side traditional
stores and are operating as
hybrid models. Thus skills
on logistics and supply
chain management will be
very critical.
? Skilling required for
quality finishing and
packaging as
premiumisation should be
reflective of international
product standards.
? Incandescent lights are
being replaced by CFLs and
LED. LED and CFLs are
expected to grow at higher
rate. Thus, technical skills
needed in manufacturing
LED like luminaries will be
critical.
? Machine operators who
understand the production
process would be needed.
47
Maharashtra
Uttar Pradesh
We
West
Bengal
Bihar
? Labor is easily available in Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Orissa, Maharashtra.
? People in these states have no alternative employment opportunity and as they are minimally skilled, they find
furniture & furnishing sector attractive.
? Youth aspirations for employment in the sector across demand clusters is low considering that these geographies
are metro, tier 1and tier 2 cities with better employment prospects in other manufacturing/services segments.
? Labor seasonally migrate for work during off season and after that they go back to their home town.
? In Furniture and Furnishing sector, labor learn work while working under some manufacturer and after learning they
open their own manufacturing unit.
Source: Industry interaction, KPMG India
Orissa
Madhya
Pradesh
Sourcing Clusters
48
Carpenter
379 91 7088 1904
Cane, willow, bamboo work
1 1 32 16
Fitter
1731 8650 55040 293792
Interior decorating and designing
32 36 704 896
Machinist
441 84 17984 2160
Mechanic machine tool maintenance
70 6 1680 144
Operator advanced machine tool
4 1 0 0
Upholsterer
1 0 16 0
Upholster
3 2 48 32
Aside these institutes, electrical engineers from various colleges are hired in the lighting industry. Also, IITs and NITs
offer course on interior designing.
Source: Directorate General of Employment & Training, KPMG Analysis
National Institute of
Design
(NID)
Ahmedabad
? 4 year graduate diploma in design
? 2.5 year post graduate diploma in design.
Indian Institute of
Crafts and Design (IICD) Jaipur
2 year Post Graduate Diploma in Craft Design with Hard Material
Specialization
MIT School of Energy
and Lighting
Pune
2 year course of Lighting including Illumination Engineering incorporating
the art, science and technology of lighting
Srishti School of Art,
Design and Technology
Bangalore
? 3 year professional diploma program program in furniture and spatial
design
? 2 year post graduate advanced professional diploma program in
furniture and spatial design
49
Source: KPMG in India analysis
? Most players provide training to their workforce in-house at the time of
induction into the organization.
? The training in most cases is provided only for a maximum period of a week
and that too based on need.
? The tradition of fathers passing on skills to their progeny is slowly dying out as
youth is not inclined to enter this sector due to plentiful employment options in
other sectors characterized by relatively ease of work and better pay scales.
? Training needs again are more on machine operation, safety and retail skills.
Automation is leading to de-skilling and the employers are not worried about
skill of floor employees. In their opinion, no pre-requisites are needed for
anyone to become a floor employee.
? Real concern according to them is the skill set of technical people like
production managers, designers, etc.
? Types of institutes/ training providers :
? One that provides general training for the sector
? In house training by leading industry players
? Government ITIs /NGO run skilling schemes
? Primarily, trainings for entry level resources (trainees) are undertaken in-house
by employers .
? There is no standard course or certification that is offered by any institute.
? Some institutes are run in collaboration with multi lateral organizations. An
example is the Karnataka German Multi Skill Development Centre
? There are very few ITI courses focusing on furniture and furnishings and
patronage is insignificant.
? The sector does not have a sector skill council or a standard nos. Thus, deciding
on course structure and the needed infrastructure like machines and tools are
difficult to estimate.
? On the whole, the attractiveness of the sector as an employer is low
? Being a largely unorganized sector, job role delineation is very narrow. For
example, a carpenter will be involved in all aspects of manufacturing a furniture.
50
Source: KPMG in India analysis
Furniture as a business in India is largely carried forward as a family venture. This
tradition of fathers passing on skills to their progeny is slowly dying out as the
younger generation is not inclined to enter this sector due to plentiful employment
options in other sectors that is characterized by relative ease of work and better pay
scales, people’s preference towards a career in the sector is waning.
Many view the occupation as just a job and don’t see a career in it. This is mainly
due to the unorganised nature of the sector and lack of defined career progression.
There is an overall lack of awareness on entitlements and career progression
amongst the workforce especially at the floor level. This is largely due to undefined
job roles and lack of NOS for the sector.
? Types of institutes/ training providers :
? One that provides general training for the sector
? In house training by leading industry players
? Government ITIs /NGO run skilling schemes
? Primarily, trainings for entry level resources (trainees) are undertaken in-house
by employers.
? There is no dedicated course offered for furniture industry.
? Some institutes are run in collaboration with multi lateral organizations. An
example is the Karnataka German Multi Skill Development Centre.
? There are very few ITI courses focusing on furniture and furnishings and
patronage is insignificant.
? The sector does not have a Sector Skill Council or a standard NOS. Thus,
deciding on course structure and the needed infrastructure like machines and
tools are difficult to estimate.
? People from rural areas often do not see merit in migrating to cities where the
cost of living is high and dignity of labour is absent.
? Further schemes such as the NREGA have disincentivised people from
migrating to cities or taking up other low paying jobs.
52
? On the basis of the research done it has been
observed that training provided in the furniture and
furnishing sector does not match industry
requirements. As a result, there is more time and
cost involved in training new recruits.
? There was lack of collaboration between industry
and individual companies R&D efforts.
? Research and development has to be a focus area,
hence there is a need for sector-academia
collaboration as well as individual R&D efforts by
companies.
? With large part of sector being unorganized, Service
tax is considered higher for unorganized segment to
bear.
? VAT introduction is a hindrance for trade within
India.
? Due to technological advancements in this sector
complex machinery from foreign countries are being
used, however the local labour in this industry does
not possess the required skill to operate such
machinery.
? Collaborative training should be encouraged in the
sector. Due to increased automation, machine
operation is driving production in the organised sector.
Machines are mostly imported and thus operating
them needs specialised guidance. Investment on such
machines for training purposes could be unviable given
the rapidly evolving technologies. Thus, having foreign
partners to run training programs can result in
effective and efficient knowledge sharing. More
initiatives like the Karnataka German Multi Skill
Development Centre should be encouraged and
initiated across the country
? The Government of India presently allows duty free
import of furniture for all the SEZs and STPIs. A sales
tax of 14.5% is being imposed for transactions with
local players. This incentives import rather than local
buying, which is affecting the sector growth.
Revisiting this tax policy will help local business
53
? Very few institutes have dedicated course for
furniture industry.
? No standard parameters for quality check are
available in Indian furniture industry. Thus, there is
no clear delineation of job roles.
? Lack of parameters or certifying agencies are
resulting into no check on standards in
manufacturing, wage rates, working environment
etc.
? At present there are no standards in the sector
against which production quality can be
benchmarked. Also, there is no standard authority to
issue certificates for any training course. These need
to be developed if the sector is to gain patronage by
the potential workforce
? Furniture is no longer a luxury good as it is needed
by every household. Currently the Government has
classified the furniture sector as luxury sector
charging a VAT of 14.5%.
? People in furniture industry do not have minimum
wage rate that why they are getting under paid
because of which youth aspirations are going
down.
? Hence, if we want to encourage employment in the
industry we should have minimum wage rate norms
so that industry can provide minimum wage rate
guarantee while seeking job opportunity.
? Minimum wage rate policy should be revised. As it is
discouraging labor to use their skills efficiently.
? It should be considered as a necessity good and VAT
should be reduced for this sector.
doc_611775215.pdf