A Comprehensive Guide to the Merits of FDI in the Retail Sector
India’s retail sector is the fourth-largest in the world in terms of economic value. It is one of the most competitive market segments and requires a large amount of capital to maintain its growth.
The retail sector contributes 10% to India’s GDP and employs 8% of the country’s population. Some of the key reasons for India being one of the fastest-growing retail markets globally are
- Rising consumer population
- Increasing urbanization of villages and cities
- More connections with rural consumers
- Higher consumer spending
- Expanding middle-class section of the society
Forecast for the retail sector
The pandemic has destabilized the world economy. Yet, notwithstanding its effects, India’s retail market is poised to touch $1.3 trillion, and its e-commerce segment is estimated to reach $350 billion in gross merchandise value (GMV) by 2030.
The Central government’s favorable and investor-friendly policies have made India an attractive FDI (foreign direct investment) destination throughout the global ecosystem. These include
- Allowing 100 percent FDI for single-brand retail trading under the automatic route and up to 51 percent for multi-brand retail trading through the government route
- Announcement of setting up of a regulatory compliance portal by the Department for Promotion of Industry and Internal Trade (DPIIT) to simplify compliance procedures between the retail industries and the government
- RBI plans for a new platform for retail digital payments in offline mode to boost India’s adoption of digital technologies
Major advantages of FDI
According to a report by Boston Consulting Group in association with the Retailers Association of India, India’s retail market is expected to grow at a compound annual growth rate (CAGR) of 9-11% to reach the $1.3 trillion target by 2030.
This incredible growth path significantly benefits both Indian businesses and foreign investors.
- Global pool of customers – Partnerships with foreign investors grant domestic businesses the chance to export their products to other nations, reaping higher revenues and expanding the company’s footprint.
- Local industry Upliftment – With the help of foreign capital, local businesses can chart out a growth path and offer more competitive services. This ensures a conducive business environment and a higher standard of living.
- Access to foreign markets and technologies – Foreign investors supply businesses they invest in with the latest procedures for larger production and modern technologies for increased output.
The foreign investor also gets access to another country’s resources, creating a win-win situation.
FDI India helps Indian businesses connect with the right foreign investors. We facilitate the entire investment process – from connecting with the investors to getting all the required government approvals and guiding you on the market strategies afterward.
We help Indian businesses acquire soft loans for business expansion and revival of Non-Performing Accounts (NPAs).
Our professional support can make your business a market leader with the assistance of FDI.