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RETAIL AND E-COMMERCE

FDI in E-Commerce Sectors

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. As a result, the retail market is predicted to grow to $1.5 trillion by 2030, increasing $700 billion from the current estimated market size of $793 billion in 2020.

India's e-commerce market has witnessed phenomenal growth in the past recent years and is still flourishing. Foreign Direct Investment in E-Commerce in India can lead to an influx of capital, further enhancing its growth potential. India's e-commerce retail business, valued at $30 billion in 2019, is expected to grow at a 30 percent CAGR to reach $200 billion in gross merchandise value by 2026.

India ranks among the best countries to invest in the Retail space.

Factors that make India so attractive include:

The second-largest population globally
A middle class of 600 million people
Increasing urbanization
Rising household incomes
Connected rural consumers
Rising consumer spending

In 2019, India was placed second in the Global Retail Development Index (GRDI). In FY20, the retail sector contributed $800 billion to India's GDP and employed 8% of the country's workforce (35 million people). By 2030, it is anticipated to have created 25 million new employment.

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

10 %

Contribution to India's GDP
8 %

Share in India's employment
10 %

Growth rate of retail sector over 2021-32
12 %

Share of Organised retail of total retail market

1

Rank #2 in Global Retail Development Index (GRDI) in 2019.
2

Expected to have more internet users (approximately 650 million) than the entire population of six G7 countries by 2021.
3

India to become the 3rd largest consumer economy by 2025 (consumption expenditure to increase 3 times to reach $4 trillion).

India's retail market is estimated to reach ~1.5 tn by 2030, from $0.79 tn in 2018, on the back of factors like rising incomes and lifestyle changes by the middle class and increased digital connectivity.
More than $8 billion in PE/VC funding will be raised by e-commerce and consumer internet companies in 2020, with 400 deals (excluding investments in Jio).
By 2021, the organized retail market's share is expected to rise to 22-25 percent, bringing the unorganized retail market's share down to 77 percent. As a result, the organized retail market can grow to over $140-160 billion dollars.
By 2026, the Indian e-commerce business is predicted to reach $200 billion, with a 30 percent compound annual growth rate (CAGR) and a market penetration of 13%, compared to 2% today.
Various agencies have high expectations about the growth of Indian e-commerce markets.

Growing income
3X rise in average household income to reach $ 18.4 mn in 2020
Growing urbanization
40% of the population living in urban areas will account for 60% plus of consumption by 2025
Digitally influenced spending
Projected to increase more than tenfold to $ 550 bn & account for 35% of all retail sales by 2025
Increase in online buyers
Online buyers to be 350 mn by 2025 from existing 90 mn

June 21- In Gurugram, Haryana, the National Agricultural Cooperative Marketing Federation of India (NAFED) has opened its first grocery shop, NAFED Bazaar, in conjunction with Tirupati Cooperative. By the conclusion of FY22, NAFED intends to open 200 grocery outlets.
June 21- Udaan has spent over INR 4,000 crore in supply chain and other sectors and expects to increase by 100% yearly in FY22.
May 21- To develop its omnichannel approach in India, IKEA announced the introduction of its shopping app.
April 21- The Haryana government has approved 140 acres of land to e-commerce giant Flipkart to construct Asia's largest fulfillment center.
March 21- Private equity firms TPG, ChrysCapital, and the Premji Invest consortium have invested $315 million in FirstCry, a children's shop.
March 21- In the next two years, CEAT Tyres plans to treble the number of freestanding retail locations for personal mobility in smaller towns and cities.
February 21- Ikea's first mall in India will open in Noida, Uttar Pradesh, at the cost of INR 850 crore. The mall will be a 12.3-acre shopping, leisure, and commercial complex.
January 21- Hennes and Mauritz AB (H&M) is launching its 50th store in Bhubaneswar, India, less than five years after launching its wholly-owned retail business in the nation.

3.3 bn FDI in e-commerce in south India and north India (in USD) in retail during November 2014 – November 2017 (Invest India estimate).
51% Foreign Direct Investment In E-Commerce In India is allowed in Multi-Brand Product Retail (Online Presence Not Allowed) under government route.
According to e-commerce FDI rules, $100%, FDI is allowed in Single Brand Product Retail (Online Presence Allowed) under automatic route.
100% FDI allowed in e-commerce (B2B & Marketplace for B2C) under automatic route.
100% FDI allowed in Cash & Carry Wholesale Trading under automatic route.
100% FDI allowed under Duty-Free Shops under automatic route.
100% FDI as per FDI policy on e-commerce allowed in Food Product Retail under automatic route.