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Retail: Jan 2012

January, 2012

India has one of the largest number of retail outlets in the world. The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. India's growing population and urbanisation offers a huge market for organised retail. Increasing economic prosperity and change in consumption pattern drives retail demand. The retail sector in India is emerging as one of the largest sectors in the economy, with total market size of US$ 425 billion in 2010.

The organised retail segment in India is expected to be 9 per cent of total retail market by 2015 and 20 per cent by 2020. India's grocery retail segment is the most attractive in the world. Hypermarkets would be the largest retail segment, accounting for 21 per cent of total retail space by 2013–14.

With a score of 63, India ranks fourth among the surveyed 30 countries in Global Retail Development Index and ranked sixth in the 2011 Global Apparel Index. India's strong growth fundamentals along with increased urbanisation and consumerism opened immense scope for retail expansion for foreign players.

Foreign retailers are entering into Indian market to share a huge profit. Foreign direct investment (FDI) up to 100 per cent is allowed under the automatic route in cash & carry (wholesale). Government is planning to remove the old tax systems to simplify the tax calculation and avoid double taxation in Indian retail. New Goods and Service Tax (GST) will simplify the tax structure.

The fast moving consumer goods (FMCG) players are focusing on rural market as it constitutes over 33 per cent of FMCG consumer base in India. Employment opportunities and increased urban amenities are attracting huge rural population towards cities for better life style.

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