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Retail: Nov 2012

November, 2012

The retail sector in India is emerging as one of the largest sectors in the economy, with total market size to touch US$ 450 billion by 2012. 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 strong growth fundamentals along with increased urbanisation and consumerism opened immense scope for retail expansion for foreign players.

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.

India ranks fourth in Global Retail Development Index and ranked sixth in Global Apparel Index in 2011. India's strong growth fundamentals along with increased urbanisation and consumerism opened immense scope for retail expansion for foreign players. Rapid emergence of organised retail outlets like mega malls and hypermarkets are augmenting the growth of organised retail in the country.

Foreign retailers are entering into Indian market to share a huge profit. Foreign direct investment (FDI) up to 100 per cent is allowed in single brand retail and for cash & carry (wholesale) trading and exports. Government has also introduced Goods and Service Tax (GST) as a single unified tax system from August 2012. 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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