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India’s retail industry to grow to $1.3 trillion by 2020

Currently, almost 94 percent of India’s retail industry is unorganised or traditional

Gulf News

New Delhi: The size of India’s retail industry is expected to more than double to $1.3 trillion (Dh4.78 trillion) by 2020, led by an estimated 25 per cent average annual growth in organised retail if overseas investment is permitted in the sector, an industry body has said.

“The Indian retail is poised to become a $1.3 trillion opportunity by 2020. With the current market size estimated at $500 billion, this translates to an additional $800 billion in the next eight years,” said R.V. Kanoria, president of the Federation of Indian Chambers of Commerce and Industry (Ficci).

The country’s traditional retail industry is expected to grow at an average annual rate of five per cent over the next year, while the organised retail is estimated to register a growth rate of around 25 per cent during this period.

Currently, almost 94 per cent of India’s retail industry is unorganised or traditional.

The central government recently took a decision to allow up to 51 per cent foreign direct investment (FDI) in multi brand retail and raise the limit for overseas investment in single brand retail to 100 per cent.

Ficci on Saturday organised an interactive meeting with different stakeholders of retail industry like representatives of small Kirana stores, farmers and consumers, to gauge the immediate concerns of the industry.

Addressing the meeting, Kanoria said FDI would help improve back end infrastructure and reduce wastage, especially of fruits and vegetables.

Kanoria said an estimated investment of almost Rs640 billion (Dh43 billion) is required to build a strong back end infrastructure in the country. “FDI in retail would help in addressing this issue with compulsory investment of 50 per cent in back end,” he said.

Lack of adequate storage facilities cause huge wastage of food products. According to some industry estimates, 35 to 40 per cent of fruits and vegetables and nearly 10 per cent of food grains in India are wasted annually due to lack of storage facilities.

In a presentation at the interactive meeting, Raghav Gupta, principal, Booz & Co, said nearly 800,000 people were currently employed directly in organised retail in India.

Without FDI this number is expected to increase to two million by 2016 (another four million opportunities via indirect employment). However, FDI in retail can potentially add another 1.5 million jobs by 2016 where additional direct employment will rise by 0.5 million and additional indirect employment will increase by one million, Gupta said.

“Less than 80 per cent of this employment opportunity will be for people with minimum qualifications. These jobs will offer higher salaries, defined career paths and better work environment compared to unorganised retail,” he said.