The Future of Organized Retail in India
The retail industry in India has been one of the largest and fastest growing industries. The Indian Retail industry, currently at $518 billion, has experienced a growth rate of 10.6% between 2010 and 2012 and is expected to grow to $1.3 trillion by 2020. Much of this growth is expected to be led by an estimated 25 percent average annual growth in organized retail. The share of organized retail currently stands at 8% of the total retail market. This share is expected to increase to 20% by 2020. This increase is predicted as a consequence of allowing up to 51 percent Foreign Direct Investment(FDI) in multi-brand retail and raise the limit for overseas investment in single-brand retail to 100 percent. The government regulation of minimum FDI of $100 million and maximum share of 51 percent in Multibrand segment implies that the minimum investment that will be available to the market by the foreign investor and its Indian partner together will be more than INR 1000cr. Mass Grocery and Apparel are two of the fastest growing organized retail segments. In both these segments there are large domestic retailers who could be potential joint venture partners for foreign retailers. Food and Grocery followed by Apparels, accounts for a significant proportion of the expenditure of Indian Consumers. With a large young working population along with increasing middleclass and working-women population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India.
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