The report expects India’s e-commerce market to grow at a compound annual growth rate (CAGR) of 30 percent due to growing internet penetration and increasing smartphone usage along with the rising number of online shoppers.
The increasing FDI and entry of multinational retailers in India are expected to increase the share of organised retail which will, in turn, contribute towards consumption-led growth of the economy, according to a report by Deloitte India.
Deloitte India unveiled a report titled, 'Retail FDI in India' highlighting the growing relevance of FDI and the government's openness on FDI in retail trade in the country.
It also said that India is poised to be the third-largest consumer retail destination in the world. But the report did not mention a time frame.
As per the report, the retail share is expected to rise from 35 percent in 2015 to 45 percent in 2025.
Collaboration between traditional and modern retailers may provide consumers a better shopping experience and increase revenue shares for both the retail channels.
The foreign investments increased from $224 million in FY18 to $443 million in FY19, as per the report.
The study reveals various reasons for the increased inflow of retail FDI in India. Going by the report, the new direct tax regime, local sourcing norms, timely and effective implementation of GST, and change in FDI requirements for the retail sector may further attract more FDI in the country.
Also, the global brands fetch capital investment, technology strength, and infrastructure benefits for local markets which will, in turn, bring in new sustainable retail models for an emerging economy like India, according to the report.
Deloitte report also emphasised the need for policy to address the trends of convergence of modern retail and traditional retail and deeper penetration of organised retail in non-urban areas – which will help make India a multinational enterprise.
The report expects the total retail and e-commerce sales to increase at a compound annual growth rate (CAGR) of 10.8 percent and 30 percent, respectively, between 2021–22.
The number of online shoppers are expected to increase from current 15 percent to 50 percent of the online population by 2026. This is due to growing internet penetration and increasing smartphone usage along with the rising number of online shoppers in India.
"Over time, with the help of regulatory assistance and on the back of a sound policy environment, India has moved up from rank 130 to 63 in World Bank’s Ease of Doing Business Report. The country has emerged to be the only one to have improved its ranking by more than 10 points consecutively for three years. This trend has helped enhance investor confidence and propelled greater inflow of FDI in India for retail," said Anil Talreja, Partner, Deloitte India.
According to the report, about 70 percent of Kirana stores in big cities and 37 percent of Kirana stores in Tier-II cities are keen to enable themselves with new technology. So far, merely 3 percent of Kirana stores are tech-enabled.Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.
