Retailing in India accounts for over 10% of GDP and 8% of employment. The retail market is expected to grow to $1.1 trillion by 2020, with modern retail doubling in size over the next three years. Currently, 93% of retail trade is unorganized. Retail is divided into value and lifestyle segments. Online retail is growing rapidly at 20% annually, while traditional trade is expected to grow at 10% annually. Lower interest rates help organized and unorganized retailers expand through borrowing. Inflation decreases retail demand. India's growing middle class and young urban consumers are increasing retail opportunities.

1. Current Status of Retail Market
• Retailing in India accounts for over 10% of the country’s Gross Domestic
Product (GDP) and around 8% of the employment (Source: IBEF).
• The Indian retail market is expected to grow to US$1.1 trillion by 2020,
while the modern retail market in India is expected to double in size over
the next three years. (Source: IBEF)
• The retail sector in India is dominated by the unorganized retail trade,
where unorganised trade forms around 93% of the overall trade.
• The sector can be broadly divided into two segments:
– Value retailing, which is typically a low margin-high volume business
(primarily food and groceries) and
– Lifestyle retailing, a high margin-low volume business (apparel,
footwear, etc). The sector is further divided into various categories,
depending on the types of products offered.
• The online retail is growing at rapid pace.
• The overall retail market in India is expected to grow at 12% growth rate
per annum, Modern trade is going to expand as twice as fast at 20% per
annum and traditional trade is expected to grow at 10% (Source: IBEF).

2. MONETARY POLICY
 INTEREST RATE:
• Lower interest rate helps the organised retailers to expand.
• Also helps the unorganised retailers to borrow money from
micro-finance.
 INFLATION:
• Increase in inflation leads to decrease in the demand of the
goods leading to the decrease in the business of the retailers.

3. DEMOGRAPHICS
• Growth in the middle class.
• Growth in the young urban consumers because of rise in the
urban income.
• Growth in aspiration
• Digital influence- Search for product online
GLOBALISATION
• The demand for the trending goods produced outside India
increases leading to import of these goods that sells in the
retail stores.

4. FDI in Retail
means that foreign
companies in
certain categories
can sell products
through their own
retail shop in the
country.
Increase in
Employment
Benefits local
Manufacturers
Technological
Advancement
Brings
Infrastructure
Investment
Removes
middleman
Advantages of FDI in
retail
100 per cent FDI in retail trading of food products
manufactured or produced in India.
Minimum investment cap is US$
100 million

5. LEGAL FACTORS
• Consumer protection
• Relaxation on rules on e-pharmacy.
• Privacy and data protection for online purchases.
MONSOON
• A good monsoon increases the demand for goods in India,
leading to increase in the business of the retailers.
EMPLOYMENT
• Entry of super-marts, malls generates employments.
• Nearly 8% of the employment comes from retail sector i.e. 4-
16 crores of people are employed in the retail related
activities.

7. Regulatory & Fiscal POLICIES of the
Government
Regulatory
• Increase in the minimum
wages
• Improving transportation
infrastructure as it is the
backbone of retail.
Fiscal
• Consumer Demand
• Cost of Doing Business
Tax-related fiscal policy affects retail
businesses by changing the amount of
disposable income people have to
spend.
• Retailers have to pay more for line of
credit due to high interest rates.
• Increase in Social Security and
Medicare add to the cost of doing
business.
Example
• Support for the automobile sector
• Reduction in capital gains tax, and
• Additional liquidity support for NBFC
• Reduction in Corporate Tax