Indian retail industry is one of the fastest growing in the world. Retail industry is expected to reach Rs 76.87 lakh crore (US$ 1.1 trillion) by 2020. India ranked 63 in the World Bank’s Doing Business 2020 publication. India ranked 73 in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019.
India is the fifth largest and preferred retail destination globally. The country is among the highest in the world in terms of per capita retail store availability. India’s retail sector is experiencing exponential growth with retail development taking place not just in major cities and metros, but also in tier II and III cities. Healthy economic growth, changing demographic profile, increasing disposable income, urbanisation, changing consumer tastes and preferences are some of the factors driving growth in the organised retail market in India.
The modern retail market in India is expected to grow from Rs 94,421 crore (US$ 13.51 billion) in 2016 to Rs 1.86 lakh crore (US$ 26.67 billion) in 2019.
India’s population is taking to online retail big way. Revenue generated from online retail is projected to reach Rs 4.19 lakh crore (US$ 60 billion) by 2020. Organised retail penetration is expected to increase to 18 per cent in 2021 from an estimated 9 per cent in 2017. India is expected to become the world's third-largest consumer economy, reaching Rs 27.95 lakh crore (US$ 400 billion) in consumption by 2025. ^Increasing participation from foreign and private players has given a boost to Indian retail industry. India’s price competitiveness attracts large retail players to use it as a sourcing base. Global retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from India and are moving from third-party buying offices to establishing their own wholly owned/wholly managed sourcing and buying offices in India.
The Government of India has introduced reforms to attract Foreign Direct Investment (FDI) in retail industry. The Government has approved 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail under the automatic route, which is expected to give a boost to Ease of Doing Business and Make in India schemes, with plans to allow 100 per cent FDI in E-commerce. Cumulative FDI inflow in retail stood at US$ 2.12 billion between April 2000 to March 2020. India’s retail sector attracted US$ 970 million from various private equity (PE) funds in 2019.
India will become a favourable market for fashion retailers on the back of a large young adult consumer base, increasing disposable income and relaxed FDI norms.
Note: ^ - According to a study by Boston Consulting Group