Snapshot

India - The Top Retail Destination

The retail market in India has undergone a major transformation and has witnessed tremendous growth in the last 10 years.

  • The retail market size is expected to reach ~1.5 tn by 2030 which is an addition of $700bn in market size from current estimated market size of $793Bn in 2020
  • The value of e-commerce market in India is expected to touch $40 bn by 2030, up from $4 bn in 2019, driven by a rapid increase in internet user base and as more people embrace online shopping
  • India’s e-commerce retail market which stood at $30 bn in 2019 is also set to grow at a CAGR of 30% for gross merchandise value to be worth $200 bn by 2026. 
  • The Indian e-commerce sector is expected to grow at a 27% CAGR over 2019-24 and is expected to reach $99 bn by 2024
  • The online commerce industry is projected to reach $188 bn in 2025 from $64 bn last year, with growing consumer preference to buy on the digital marketplace
  • Direct-to-Consumer segment could have a $100 billion addressable market by 2025.
  • The number of households carrying out online transactions in India is estimated to grow from 154 mn in 2020 to 233 mn in 2025\
  • $ 72 K worth of merchandise was sold on E-commerce Websites. This figure has tripled since 2015

India ranks among the best countries to invest in Retail space. Factors that make India so attractive include the second largest population in the world, a middle class of 600 mn people, increasing .urbanisation, rising household incomes, connected rural consumers and increasing consumer spending.

  • India ranked No. 2 in Global Retail Development Index (GRDI) in 2019.
  • Retail sector has contributed ~800 Bn to India’s GDP in FY20 and has employed 8% of it’s workforce (35+ Mn). It is expected to create 25 Mn new jobs by 2030.

Recent policy changes allow 100% FDI under the automatic route for single-brand retail trading.

For further details, please refer FDI Policy

  • %

    Contribution to India's GDP

  • %

    Share in India's employment

  • X

    Rise in consumption

  • X

    Growth in organized retail

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India ranked No.2 in Global Retail Development Index (GRDI) in 2019

India to have more internet users (650 mn) than the entire population of six G7 countries by 2021

India to become third-largest consumer economy by 2025 (consumption expenditure to increase by a factor of 3 to reach $ 4 tn)

Industry Scenario

The Indian e-commerce industry is expected to cross the $200 bn mark by 2026.

India’s retail market is estimated to reach ~1.5 tn by 2030, from $0.79 tn in 2018, driven by socio-demographic and economic factors such as urbanisation, income growth and rise in nuclear families. On the other hand, the Indian e-commerce industry is expected to cross $200 bn mark by 2026, growing at a CAGR of 30%, and have a market penetration of 12% compared to 2% currently.

In 2020, e-commerce accounted for nearly a third of several electronic categories, almost half of smartphones sold, and about a fifth of all apparel sales in India. In 2020, e-commerce and consumer internet companies raised more than $8 bn in PE/VC capital across 400 deals (excluding investments in Jio). India's e-commerce market is growing at YoY rate of 5% with estimated revenue of $56.6 billion in FY 2021.

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 bn, while the unorganized market holds the rest. The share of the organized retail market is projected to increase to 22-25% by 2021, thereby reducing the unorganized retail market’s share to 77%. The organized retail market, therefore, has the potential to reach approximately $140-160 bn.

GROWTH DRIVERS

  • Growing income

    3X increase in average household income to reach $18,448 in 2020, from $6,393 in 2010

  • Increased online spending

    Online shoppers are expected to increase to 300Mn – 350Mn by 2025 from current number of ~100Mn, with digital spending Projected to increase more than tenfold to $550 bn & account for 35% of all retail sales by 2025

  • Growth of rural consumption

    Rural per capita consumption will grow 4.3 times by 2030, compared to 3.5 times in urban areas

  • Young millennial households

    India will add nearly 90 million new households headed by millennials, who were born into liberalized India. The average age of the country by 2025 will be 29 with the world’s largest skilled manpower pool of 600 million+ by 2025.

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FAQs

Frequently
Asked Questions

Are we allowed to sell products of a sub brand if we have a Single Brand Retail Trade (SBRT) license?

No, any addition to the product/product categories to be sold under 'Single Brand' would require a fresh approval of the Government.

For more information, click here.

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What are the rules for sale of goods in online e-commerce?

An e-commerce entity will not be permitted more than 25% of the sales affected through its marketplace from one vendor or their group companies.

For more information, click here.

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If I want to set up online and I already operate as an SBRT, do I need special permission?

Subject to the conditions of SBRT under the FDI policy (link), a single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.

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Describe the term wholesale cash and carry as per the Foreign Direct Investment policy.

Cash & Carry Wholesale trading/Wholesale trading, would mean sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and related subordinated service providers.

For more information, click here.

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What is a marketplace and inventory based model of e-commerce?

1) Marketplace based model of e-commerce means providing an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between the buyer and seller.


2) Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.

For more information, click here.

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