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Fact Sheet: India’s retail sector

November 25, 2011

India could on Thursday decide to throw open the doors to foreign retailers such as Wal-Mart Stores, in one of the most eagerly anticipated economic reforms of Prime Minister Manmohan Singh’s tenure.

After years of delay due to political opposition, Singh’s cabinet will discuss on Thursday allowing 51 percent foreign direct investment (FDI) in multi-brand retail and full ownership in single-brand retail.

Following are some facts on the retail sector in India:

  • The retail sector in the nation of 1.2 billion people is estimated to have annual sales of $450 billion, with nearly 90 percent of the market controlled by tiny family-run shops.
  • Organised retail, or large chains, makes up less than 10 percent of the market but is expanding at 20 percent a year. This is driven by the emergence of shopping centres and malls, and a middle class of close to 300 million people that is growing at nearly 2 percent a year.
  • India currently only allows FDI in cash-and-carry, or wholesale ventures. There are restrictions on foreign investment in retail because of opposition from millions of small shopkeepers who are valuable vote banks during elections.
  • India, which currently allows 51 percent FDI in single-brand retail and 100 percent in wholesale operations, is considering opening fully its single-brand retail sector to FDI.

LOCAL COMPANIES

  • Pantaloon Retail, is the country’s largest-listed retailer, operating hypermarket chain Big Bazaar, supermarket brand Food Bazaar and the apparel brand Pantaloons.
  • Other prominent players are K Raheja group-owned Shoppers Stop, Reliance Retail, a unit of Reliance Industries, Tata Group’s Trent, Aditya Birla Retail and RPG Group, which runs the Spencer hypermarkets.

MAJOR FOREIGN COMPANIES

  • Wal-Mart Stores Inc has a cash-and-carry operation with local partner Bharti Enterprises, the parent of leading mobile services provider Bharti Airtel, and will add up to 10 new cash-and-carry stores in 2011 to its existing six stores.
  • Tesco, UK’s largest retailer, has a tie-up with Trent for a franchise agreement for its hypermarket chain Star Bazaar. Tesco is also looking to enter the wholesale market through the tieup.
  • Germany’s Metro AG operates six wholesale stores in India and will add up to four new wholesale stores by the end of 2011.
  • France’s Carrefour has one cash-and-carry store in New Delhi. It plans to open a few more such stores in northern India by the end of 2011. The world’s second-biggest retailer has been seeking a local partner to enter the hyper or supermarket sectors in the country.

Courtesy & Source – Reuters

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