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Retail Sector in India

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In the present times, Retail and Real Estate are the two booming sectors of India. If we talk about the boom in retail sector, the retail sector is the largest sector in India after agriculture, accounting for over 10 per cent of the country's GDP and around 8 per cent of the employment. India is one of the most attractive and fast growing destinations for retailers from all across the globe. Thanks to the entry of corporate, gradual increase the limit of Foreign Direct Investment (FDI) in retail sector, increasing influence of western culture and rising income, changing customer behavior & lifestyle, the Indian retail industry has seen phenomenal growth in the last six years (2001-2007). As per the industry experts, the prospects of Retail and Real Estate sectors are mutually dependent on each other. Retail, one of India's largest industries, has presently emerged as one of the most dynamic and fast growing industries of our times with several players continuously entering the retail market in India and investing in developing the infrastructure and construction of the retailing business.

Retail sector in India has opened up to the foreign brands. The Indian Government has finally taken steps towards opening up the retail sector to foreign investment. In a recent announcement, the Indian Government stated its intention to allow foreign investment in 'single brand' retail up to 51% with the remaining 49% to be possessed by Indians. This policy has attracted a lot of foreign retailers to expand their business in India. It is required for the agency responsible for authorizing foreign investments into retail sector of the country, to take the permission of the Foreign Investment Promotion Board, before any investment is made in India. 'Single brand' retail means that a retail store with foreign investment can only trade in or sell one brand.

Retail Sector in India, Retail Market, Consumer Market
Retail Sector in India is expanding at an exponential rate. As per the industry experts, India's retail sector, which is currently valued at nearly $350 billion, is expected to double in size by 2015. The Indian Retail Industry is gradually moving ahead towards emerging the next boom industry.

The following are the main reasons and trends for growth of Indian retail industry:

  • India's economy is booming
  • Increase in disposable income and purchasing power of consumers
  • Increase in consuming desire
  • Low share of organized retailing
  • Falling real estate prices
  • Increase in expenditure for luxury items
  • More nuclear families in urban areas
  • Global retail giants entering the retail industry in India
  • Favorable reforms initiated by the government of India

With increase in disposable income, the purchasing power of Indian urban consumer is also growing and branded merchandise in various categories like Accessories, Apparels, Food, Electronics and even Jewellery, are gradually becoming lifestyle products. Retailers are taking benefit of this growth and accordingly are aiming to expand more and more.

The retails sector in India is also getting advanced. Modern Large-Format retail, proficiently connects the producers and the consumers and is helpful to both in the long run. In India there is an enormous wastage of fresh fruits and vegetables. In this situation, the Large-Format Retail provides all important infrastructures to transport the farm produce to the consumers with lesser wastage. This way leads to the better returns to the farmers and good quality and less price to the consumers.

Expected Investments in Indian Retail Industry

Retail, one of India's largest industries, has presently emerged as one of the most dynamic and fast growing industries which is continuously attracting several players entering the retail market and expand their business.

As per the sources, followings are some of the major investment expected to be made in Indian retail industries -

  • Bharti-Wal-Mart will invest approx. US$2.5 billion by 2015.
  • Reliance Industries Limited is planning to invest US$ 6 billion in the organized retail sector in India by opening 1500 supermarkets and 1000 hypermarkets by 2010-2011.
  • Future Group (Pantaloon Retail) will invest US$260 million by 2008.
  • Metro AG is investing US$400 million over the next three years.
  • Pantaloons is planning to invest US$ 1 billion in order to increase its retail space to 30 million square feet
  • New Delhi-based round-the-clock convenience chain Twenty Four Seven Retail Stores Pvt. Ltd plans to invest US$200 million in the next five years and targeting an emerging segment of night shoppers.
Major global retail giants are also expending their business in India and this which is also one of the key factors in the growth of the organized retail sector in India. Some of the major international retail groups who are entering the organized retail sector in India are:
  • Wal- Mart
  • Carrefour SA
  • Tesco
  • Metro AG

Also See:    FDI in Retail Sector in India  || Most competitive spot in modern retailing

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