The Indian retail sector is one of the prime business enterprises of the Indian economy and contributes on an average upto 15 percent to the GDP. The industry is estimated to be USD 512 billion in 2012 and was among the top five retail markets in the world till 2012. However, in 2013, India come down to a lower rank owing to the global slowdown. The GDP growth rate stood at 5 percent, down from a 10-year average of 7.8 percent. The industry has experienced a growth of 10.6 percent from 2010 to 2012 and the sector is expected to reach USD 700 billion by 2015 according to industry experts. India’s retail sector predominantly includes the owner manned small shops which accounts for almost 92 percent. India currently has a small market share within the organized retail segment as compared to other emerging markets such as China, which has a market share of more than 20 percent within organised retail according to the Global Retail Index report by the World Retail Conference.
Better employment opportunities and improved lifestyles have pulled the rural population towards cities. This factor would be a significant driver for organized retail, as manpower will increase. Another important factor in the success of retail is the availability of space, as multi-brand retailers require sprawling outlets.
The Indian Government refused Foreign Direct Investment in multi-brand retail till 2011, prohibiting the foreign groups from any ownership right in supermarkets, convenience stores or other outlets. The single-brand retail was limited to 51 percent ownership only. In 2012, the Government of India passed a Foreign Direct Investment policy which allows foreign retailers to own up to 51 per cent in multi-brand retail and 100 percent in single brand retail. These stores will now have full access to over 500 million urban consumers in India, who are within the age of 25 and have high levels of consumption.