The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several key players. It accounts for over 10% of country’s GDP and close to 8% of employment in India. The total consumption expenditure is expected to cross US$ 3,600 billion by 2020 from US$ 1,824 billion in 2017. India is regarded as the world’s 5th global destination in the retail space. As per FDI Confidence Index, we rank at 16th place globally.
In 2018, retail industry reached US$ 950 billion at CAGR of 13%, which is expected to reach US$ 1.1 trillion by 2020. Revenue generated from online retail is postulated to grow to US$ 60 billion by 2020. Revenue of India’s offline retailers, also known as brick and mortar (B&M) retailers, are expected to increase by Rs 10,000-12,000 crore (US$ 1.39-2.77 billion) in FY20. At this pace, India is expected to become the world’s fastest growing e-commerce market, driven by robust investment in the sector and rapid increase in the number of internet users. Various agencies like ASSOCHAM have high expectations about growth of Indian e-commerce markets supported by growing exposure of international brands amongst Indian youth and higher purchasing power of the upper class in tier 2 and 3 cities.
The Indian retail trading received Foreign Direct Investment (FDI) equity inflow OF US$ 1.85 billion during April 2000–June 2019, according to the Department for Promotion of Industry and Internal Trade (DPIIT). With the increasing need for consumer goods in different sectors including consumer electronics and home appliances, many companies have plans to invest in the Indian retail space. For instance, Walmart Investments Cooperative U.A invested Rs 2.75 billion (US$ 37.68 million) in Wal-Mart India Pvt Ltd. The Government of India has taken various initiatives to improve the retail industry in India. The Government had proposed to change the Foreign Direct Investment (FDI) rules in food processing, in a bid to permit e-commerce companies and foreign retailers to sell “Made in India” consumer products. 100% Foreign Direct Investment (FDI) in online retail of goods and services was allowed through the automatic route, thereby providing clarity on the existing businesses of e-commerce companies operating in India.
E-commerce is expanding steadily in the country and is creating the biggest revolution in the retail industry. It is projected that by 2021 traditional retail will hold a major share of 75%, organized retail share will reach 18% and e-commerce retail share will reach 7% of the total retail market. Nevertheless, the long-term outlook for the industry is positive, supported by rising incomes, favorable demographics, entry of foreign players, and increasing urbanization. As student of Calcutta Business School, I believe that the retail sector is booming with innovation and has given wider choices to the consumers with improved penetration in market over the years.
Data source: Dept. of industrial policy and promotion