The impact of COVID-19 on the furniture industry was severe. During January 2020 - September 2020 the gross absorption of commercial office fell by 46% year on year to 22.5 million sq.ft due to prolonged lockdown in the country impacting the furniture market in the commercial sector. Construction work in the country has come to a standstill owing to the nationwide lockdown to combat the COVID-19 pandemic kicking in, triggering concerns that the companies would see revenues being hurt and may even incur losses on some projects. The country-wide lockdown imposed by the government to check the spread of coronavirus has resulted in construction companies announcing a shutdown of operations. This is likely to delay the implementation of projects, leading to cost overruns and impacts on the workforce. However, the condition is expected to recover in 2021, thereby restoring the growth trajectory of market studied.

- In the long term, major factor driving the market studied is the increasing demand for furniture in the office space and hospitality sectors. International hotels are expanding their presence in the country, and are likely to account for around 47% of the Indian tourism and hospitality sector. In India, many hospitality groups (both Indian and foreign) are investing in projects related to hotel construction. For instance, Hilton, a global hospitality major, is planning to open another 18 hotels across the country by 2021, which is likely to boost market demand.

- Increasing usage of medium-density fiberboard as a substitute to particle board can hinder market growth in the country.

- In the raw material segment, wood dominated the market in 2020, and is expected to grow during the forecast period.

- Upcoming construction and infrastructure projects in the country are likely to act as an opportunity in the future.

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Key Market Trends

Increasing Demand for Furniture from the Office Space and Hospitality Sectors

- Office space leasing in the country has increased by about 27%, crossing over 69.4 million sq ft in 2019.

- In India, the furniture market is expected to register a growth rate of more than 20% in the coming years.

- With the demand from technology, e-commerce companies, and banking-financial services, the office space requirement in India is significantly rising, resulting in the construction of new offices, thereby enhancing the demand for furnitures in the offices. Bengaluru city is leading the office demand and supply activity in the country.

- The travel and tourism contribution to the GDP in the year 2019 was 6.8% of the total economy, USD 194.3 billion.

- The Indian government is supporting the tourism and hospitality sector with various initiatives and
investments. Under the Union Budget 2020-2021, INR 207.55 crore was allocated to the Ministry of Tourism, for the development of tourist circuits under PRASHAD scheme. In addition, the government created a category of visa, M-visa category, to encourage medical tourism.

- Increase in the demand from the office space and hospitality sector projects, coupled with several government initiatives and investments, is likely to significantly boost the furniture market’s growth.

Furniture to be the Major Application

- India is a growing economy and holds great potential for future market opportunities. The country witnessed a decline in its GDP growth rate to around 5% in 2019, from 7.1% in 2018. The stagnation caused by industrial output, greenfield investment, and flattened demand has led to a decline in the country's growth rate.

- The outbreak of COVID-19 has further affected the domestic construction and manufacturing industries in early 2020. This is expected to continue in 2020, which, in turn, is expected to witness a decline in the consumption of metamaterials in the country in 2020. India's economy is projected to contract to 10.3% in 2020 following a longer lockdown period and slower recovery than anticipated in April. However, the GDP is expected to reach 8.8% in 2021.

- Particle boards have numerous uses in the furniture industry, which experienced high demand from the residential and commercial sectors. Plain particle boards are used in interior applications, such as beds, storage units, wardrobes, computer tables, bookshelves, shoe racks, and television cabinets.

- Wood veneer particle boards are used in kitchen cabinets, storage units, tabletops, countertops, wardrobes, and dressing units, due to their durability and better performance in moist environment, as compared to plain particle boards.

- According to the joint report by the CREDAI and JLL, the Indian real estate sector is estimated to be worth USD 180 billion by 2020, and contribution of the residential segment to the country’s GDP is expected to be 11%. The construction of buildings and residential houses have increased significantly, owing to increasing income level and various housing schemes initiated by the governement.

- With the government support regarding the intention to provide employment and create jobs for the individuals in the country, many startup companies are being started, resulting in the increasing number of offices.In June 2018, the Prime Minister of India, Narendra Modi, announced that funds of INR 10,000 crore were created to ensure INR 1 lakh crore funding for startups.

- According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), Foriegn Direct Investment (FDI) in construction development and activities stands at USD 42.97 billion between April 2020 and September 2020.

- The aforementioned factors has positively impacted the demand for furniture in residential houses and offices in the country, in turn, driving the demand for particle boards during the forecast period.

Competitive Landscape

The Indian particle board market is highly fragmented, due to the presence of different players in different states. Major part of the market is highly unorganized. The major companies include Shirdi Industries Ltd, Associate Décor Ltd., Century Prowud, Krifor Industries Pvt. Ltd., and Archidply Decor ltd.

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