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. Total consumption expenditure is expected to reach nearly USD $3,600 bn by 2020 from USD $1,824 bn in 2017. India’s e-commerce market has witnessed a 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 ranks among the best countries to invest in Retail space. Factors that make India so attractive include the second largest population in the world, a middle class of 600 million people, increasing .urbanisation, rising household incomes, connected rural consumers and increasing consumer spending. India has overtaken China to grab the top spot in A.T. Kearney's 2017 Global Retail Development Index. Retail is India's largest industry, currently accounting for over 10% of the country's GDP and 8% of total employment.

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

 

 

  • 1

    Rank #1 in Global Retail Development Index (GRDI) in 2017

  • 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 expected to increase by 60% to reach USD $1.3 trillion by 2020, on the back of factors like rising incomes and lifestyle changes by middle class and increased digital connectivity

Online retail sales are forecasted to grow at the rate of 31% year-on-year to reach USD $32.70 bn in 2018

The Indian e-commerce industry is expected to cross $100 bn mark by 2020

With estimations of having market penetration of 12% by 2026 instead of the current 2%, the e-commerce market is set to grow at a CAGR of 30% for gross merchandise value to reach $200 bn by the same year

India is largely an unorganized retail market, contributing 92% to the total retail sector in India. The organized retail market is currently valued at $60 bn, while the unorganized market holds the rest

Various agencies have high expectations about growth of Indian e-commerce markets

  • Growing income

    3X rise in average household income to reach $ 18.
  • Growing urbanization

    40% of the population living in urban areas will a
  • Digitally influenced spending

    Projected to increase more than tenfold to $ 550 b
  • Increase in online buyers

    Online buyers to be 350 mn by 2025 from existing 9
  1. May 2019: Private equity fund Gaja Capital has invested Rs.50 cr in lifestyle brand Chumbak Design in a funding round. The total raised amount Rs.70 cr will be used for expanding its presence and increasing the product categories.
  2. Apr 2019: Alibaba backed online grocery platform BigBasket is investing $100 mn to strengthen its supply chain by setting up vending machines and distribution centres.
  3. Apr 2019: New York based investor Tiger Global has invested $89 mn in Bengaluru based agri - tech start-up NinjaCart in a funding round, picking up about 26.5% stake and valuing the start-up at over $320 mn.
  4. Apr 2019: E-Commerce giant Flipkart opened its second data centre in Hyderabad in partnership with CtrlS, to strengthen its growing marketplace e-commerce business.
  5. Oct 2018: US-based Walmart Inc. plans to invest about Rs.3,200 crore to roll out 47 wholesale stores in India by the end of 2022.
  6. Sep 2018: Beccos, a South Korean designer brand is set to enter the Indian market with an investment of about Rs.100 crores (USD $14.25 mn) and open 50 stores by June 2019.

  • 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

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