Italian furniture units to woo Indian market

By R. Gopalakrishnan

PESARO-URBINO (Italy), NOV. 28. The Marche Region of Italy is all out to woo the Indian market for one of its highly specialised and competitive sectors, the furniture industry. Banking on the advantage of economies of scale mainly in terms of ``cluster economics'' rather than large volume production in individual furniture units, the regional government and industry associations are trying to focus the attention of the Indian market especially on the Pesaro-Urbino province in the Marche region that accounts for more than 80 per cent of the furniture units and production in the region.

Furniture, along with food processing, had, in fact, featured among 12 sectors identified by a joint taskforce survey report prepared in 1997-98 for the Confederation of Indian Industry (CII) and its Italian counterpart, Confindustria, by PriceWaterhouse for promotion of Indo-Italian bilateral cooperation. Since then, a beginning has been made by the two countries by way of exchange of delegations of businessmen from the two sectors.

Following the visit of an Italian furniture industry delegation in February this year to India, a 12-member strong Indian counterpart delegation is here, meeting potential partners in trade and investment. (Another, smaller Indian delegation representing the food processing and wine sectors is also in this region, meeting their counterparts and hoping to end with cheers on both sides).

The cluster advantage of Pesaro-Urbino on the Adriatic coast derives from its concentration on wood furniture production, wood-working machinery production and manufacture of components and sub-assemblies. The availability of different products in the value chain in the furniture sector within a limited area and concurrent development of skills have given the province a lead that is reflected in the fact that 1,370 companies, mainly in the small and medium and just a few in the large industry sectors, operate in Pesaro-Urbino. The turnover of the furniture industry of Pesaro-Urbino in 1999 is estimated at $1,490 millions, out of which $370 millions accounted for exports, largely to other European countries (66 per cent), but also substantially to countries round the globe. Asia accounted for 20 per cent of the furniture exports of Pesaro-Urbino and the U.S. 12 per cent.

The items of specialisation by these companies are the ones which the Indian delegation is particularly interested, namely, kitchen and bedroom furniture, and the members of the Indian team had one-to-one talks today with about 40 Italian companies at the Pesaro Exhibition Centre, following visits to some of the units in the past two days.

Some Italian entrepreneurs and executives and promotional officials told The Hindu that besides exchange of missions and information, what is needed to accelerate trade cooperation with India, at least in the case of some larger Italian companies in the furniture sector, is overcoming the inability or reluctance (it could be either or both) of a section of the trade in India to do business through banks under letters of credit. Some members of the Indian delegation said the cost of LCs in India at 3 per cent compared to 2 per cent abroad and more importantly, the complex procedures and need to adhere strictly to the terms and words of the LCs were the main reason for this phenomenon in cases where it existed.

``It could be that there is not enough trust between banks in India and the trade or some tax problem or whatever, but this is a problem that warrants attention. The market size in India is no problem at all,'' said a senior executive of a leading Italian manufacturer.

Some Italian companies in the furniture sector visited by the mission are well-known in trade circles in India. These include Berloni, one of the pioneers and well-organised family-owned corporate groups, and Polywood. Other units visited included Stilema, which specialises in classical furniture not meant for the economy-minded, in contrast to Polywood which, with its relatively big plant and automatised production, targets the low and middle segments of the market. Berloni has a whole range of companies in its basket and is in the forefront of the sector. It is also involved in agricultural and wood production. There are also producers of chairs and office furniture but practically the entire industry is based on wood, mostly imported. The rising incomes among the new middle class, besides the traditionally rich and industrial class in India perhaps hold a promise that there would be place for every segment of the Italian furniture industry in the Indian markeplace.

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