India has occupied a remarkable position in global retail rankings on the back of high market potential, low economic risk, and moderate political risk. In market potential, India ranks fifth after the United States, China, Brazil and Canada. Retail market in India is expected to reach US$ 1.3 trillion by 2020 from US$ 490 billion in 2013.
Of the overall retail market in India, unorganised players controlled 92 per cent market share during 2013. Organised retail is expected to account for 24 per cent by 2020. Food and grocery accounted for nearly 69 per cent of total revenues in the retail sector, followed by apparel (8 per cent) in 2013. Rapid emergence of mega malls and hypermarkets are augmenting the growth of organised retail in the country.
The Government of India has approved 51 per cent foreign direct investment (FDI) in multi-brand retail and increased foreign direct investment (FDI) limit to 100 per cent in single-brand retail and cash and carry (wholesale) trading and exports. It also plans to introduce Goods and Service Tax (GST) as a single unified tax system from the next fiscal year.
India's strong growth fundamentals, along with increased urbanisation and consumerism, offer immense scope for retail expansion for foreign players. Rapid emergence of organised retail outlets, such as mega malls and hypermarkets, are augmenting the growth of organised retail in the country. Retailers have made constant improvements in supply chain and logistics for competitive advantage and meeting consumer demands. E-commerce is expected to be the next major area for retail growth in India. The industry is projected to touch US$ 200 billion by 2020.