Indian retail industry is one of the fastest growing in the world. India ranked 63 in the World Bank’s Ease of Doing Business 2023 publication. India’s direct selling industry is expected to be valued at US$ 7.77 billion by the end of 2025.
The FMCG industry has been projected to grow to a market size of almost US$ 220 billion by 2025 and US$ 615.87 billion by 2027. The FMCG sector is one of the fastest-growing sectors in India, with a growth rate of 8.9% in 2022.
India’s e-commerce sector is expected to reach US$ 53.08 billion in 2024, with an annual growth rate of 11.45% to reach 91.24 billion by 2029. The UPI transactions touched US$ 1.51 trillion in 2022, with a user base exceeding 800 million.
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. According to data released by the Ministry of Statistics & Programme Implementation (MoSPI), the annual inflation rate based on all India Consumer Price Index (CPI) number is 4.83% (Provisional) for the month of April 2024 (over April, 2023). Corresponding inflation rate for rural and urban is 5.43% and 4.11%, respectively. According to Retailers Association of India (RAI) and Boston Consulting Group (BCG), Indian retail market is expected to reach US$ 2 trillion by 2032.
As per Kearney Research, India’s retail industry is projected to rise at a CAGR of 9% between 2019 and 2030, from US$ 779 billion in 2019 to US$ 1,407 billion by 2026 and more than US$ 1.8 trillion by 2030.
Retail sales in India grew 4% in February 2024, compared to the same period in 2023.
India is one of the most promising and developing marketplaces in the world. There is a great deal of desire among multinational corporations to take advantage of the consumer base in India and to enter the market first. Due to India’s wealth of resources, availability of labour at relatively low costs, and special investment wages such tax breaks, etc., foreign corporations prefer to invest here.
India’s retail sector was experiencing exponential growth with retail development taking place not just in major cities and metros, but also in small cities. Healthy economic growth, changing demographic profile, increasing disposable income, urbanisation, and changing consumer tastes and preferences have been some of the factors driving growth in the organised retail market in India.
The organised retail market in India has 12% share of the total retail market and has a growth rate of 10% over 2021-2032. Increasing demand for organized retail space has helped create a capacity of ~120 million square feet (MSF) in retail space across major Indian cities. Major Indian cities include Delhi (23.7 MSF) and Mumbai (16.7 MSF).
India ranks among the best countries to invest in Retail space. Factors that make India so attractive include the second largest population in the world, a middle-income class of ~158 households, increasing urbanization, rising household incomes, connected rural consumers, and increasing consumer spending.
The E-Commerce market is expected to touch US$ 350 billion in GMV by 2030. As of December 2022, there were 7.8 billion daily e-commerce transactions. Online shoppers in India are expected to reach ~500 million in 2030 from 150 million in 2020.
Online shoppers in India are expected to reach ~500 million in 2030 from +150 million in 2020. The Indian e-commerce industry is expected to cross US$ 350 billion mark by 2030, growing at a CAGR of 23%.
The Indian Retail sector has seen good investments and developments in the recent past.
Cumulative FDI inflows stood at US$ 4.63 billion in the retail trading sector between April 2000-March 2024. Due to India’s wealth of resources, availability of labour at relatively low costs, and special investment wages such tax breaks, etc., foreign corporations prefer to invest here.
To improve the business climate and make it simpler for foreign companies to register fully owned subsidiaries in India, the Indian government has implemented several rules, regulations, and policies.
As of September 2023, Swedish furniture maker Ikea was looking for omnichannel expansion with diverse retail formats besides kicking off online operations in Delhi-NCR by the end of 2024 as it enters the second phase of growth in the Indian market.
Reliance Industries is likely to sell another 8-10% stake in Reliance Retail Ventures Ltd (RRVL) to fund expansion, retire debt and prepare for the initial public offering of the conglomerate's retail business.
In November 2022, Swiss smart wearable device maker Garmin expects India to be among its top three markets in Asia in the next five years, fuelled by post-Covid health activity trends in the country.
In November 2022, Aditya Birla Fashion and Retail Ltd. entered a strategic partnership with the Galeries Lafayette to open luxury department stores and a dedicated e-commerce platform in India.
Canadian restaurant chain Tim Hortons plans to open around 120 stores in India in the next three years at an investment of up to Rs. 300 crores (US$ 36.33 million).
IKEA, the Swedish furniture maker has drawn up plans to invest Rs. 850 crore (US$ 102.41 million) in its Indian operation.
Swedish retailer H&M is set to launch its home décor and accessories products such as dinnerware and bed linen in India next month. H&M HOME will be available on the company’s website and through Myntra in March.
Lulu Group, a UAE-based retail company, will invest Rs. 2,000 crore (US$ 240.96 million) to develop a shopping mall near Ahmedabad in Gujarat as part of its plans to expand business in India.
In January 2024, UPI transactions were valued at Rs. 18.4 lakh crore (US$ 221.6 billion).
In August 2022, Louis Philippe, India’s leading premium menswear brand from Aditya Birla Fashion and Retail Ltd., announced the launch of its outlet in Vadodara, Gujarat.
In August 2022, Wipro Consumer announced the launch of traditional snacks and spices as it forays into packaged foods.
In July 2022, Reliance Brands Limited (RBL) partnered with Maison Valentino to bring to India the most established Italian Maison de Couture.
In June 2022, Reliance brands limited inks a JV with plastic legno spa to strengthen toy manufacturing ecosystem in India.
In May 2022, Reliance Brands Limited (RBL) partnered with Tod’s S.p.A, the iconic Italian luxury brand to become the official retailer of the brand across all categories including footwear, handbags, and accessories in the Indian market.
In May 2022, GIC acquired 8% stake for US$ 282 million in Aditya Birla Fashion and Retail Limited.
In April 2022, Wipro Consumer Care inaugurated its factory in Telangana.
According to the Minister of State for finance, Total digital payment transactions volume increases from 2,071 crore in FY 2017-18 to 13,462 crore in FY 2022-23 at a CAGR of 45%
Online shoppers in India are expected to reach ~500 million in 2030 from +150 million in 2020.
In July 2022, Reliance Retail announced a partnership with Gap Inc to bring the all-American fashion brand to India.
The Government has approved 51% FDI in multi-brand retail and 100% 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% FDI in E-commerce.
E-commerce is expanding steadily in the country. Customers have the ever-increasing choice of products at the lowest rates. Online retail market in India is projected to reach US$ 350 billion by 2030 from an estimated US$ 70 billion in 2022, due to rising online shoppers in the country. 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. 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.
Note: ^ - According to a study by Boston Consulting Group
