Budget expectations: Furniture sector

21 Jan 2022 , 04:26 PM

“In view of the global political and economic supply chain issues, India is poised to become a hub for furniture manufacturers. Recognizing this, the government had also set up a task force which shared recommendations on areas of reduction in customs, import duty on raw materials and sub- assemblies, for a period 3 — 5 year, till these factors are developed in the Indian furniture ecosystem. 

The differential between the import duty on finished goods and raw material could create a price advantage for furniture manufactured in India. Further, subsidy on transportation through railways will also lead to reduction in logistics cost, which are 5 — 10% higher than global logistics cost.

With commodity prices hardening and raw materials like steel, particle board etc. having increased by close to 30 — 40%, manufacturers will have to pass this cost to consumers leading to a decline in sales volumes.

MSMEs contribute large volumes in furniture industry and drop in sales affects these units as furniture is a necessity both in domestic and healthcare, offices and other institutions.

The Government could consider a reduction in GST to encourage the industry and enhance growth of local furniture industry.  They should also start considering furniture under the PLI (Production Linked Incentive) scheme.”

The author of this article is Mr. Anil Mathur, Chief Operating Officer, Godrej Interio.

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com