The Indian retail industry has emerged as one of the most dynamic & fast-paced industries due to the entry of several new players. It has witnessed tremendous growth in the last 10 years. India currently has the 4thlargest retail market in the world. India ranked 2ndin Global Retail Development Index (GRDI) in 2019. Retail is India’s largest industry accounting for more than 10% of the country’s GDP & 8% of total employment. Government of India has introduced various reforms to attract FDI in Retail industry. GST regime introduced in 2017 as a single unified tax system has also been an enabler in this direction. India is largely an unorganized retail market, contributing 88% to the total retail sector in India. The organized retail market is currently valued at $60 billion, while the unorganized market holds the rest.
100% FDI is permitted under automatic route in Single Brand Retail Trading (SBRT).
Upto 51% FDI is allowed through approval route in Multi Brand Retail Trading (MBRT)
Current Scenario
- Retail trading sector has received FDI inflows of $ 3.75 billion during April 2000–December 2021
- The sector attracted $ 970 million from private equity funds in 2019. The total value of digital transactions in India for 2020 was $ 537 million. Currently, there are 1.2 million daily e-commerce transactions.
- With the rising need for consumer goods in different sectors including consumer electronics, home appliances & utilities, many companies have invested in the Indian retail space
Investment Opportunities
- Organized Retail, Fast Moving Consumer Goods (FMCG), especially in tier-2 & tier-3 cities, Brick & Mortar
- Ecommerce, the biggest revolution in retail industry. Customers have the ever-increasing choice of products at the lowest rates
- Supply chain infrastructure, Logistics-India is emerging as one of the important sourcing base for a wide variety of goods for international retail companies
Why Invest?
- Relaxed sourcing & FDI rules
- Collective schemes of financial houses & banks with retailers, enabling consumers to buy durable products with easy credit
- 2ndlargest population in the world, a middle class of 600 million people, increasing urbanization & connected rural consumers
- India is likely to add 90 million new households headed by millennials, who were born into liberalized India
Read Ahead
- India to become 3rdlargest consumer economy by 2025 with an estimated annual gross merchandise value of $350 billion. Direct-to-Consumer segment could have a $100 billion addressable market
- The overall Retail market is set to reach $1.5 trillion by 2030, from $0.793 trillion in 2020. Consumption expenditure to increase by a factor of 3 to reach $ 4 trillion
- Rural per capita consumption is likely to grow 4.3 times by 2030, compared to 3.5 times in urban areas. Long-term outlook for the industry is positive
