Retailing is one of the world’s largest private industries. Liberalizations in FDI have caused a
massive restructuring in retail industry. The benefit of FDI in retail industry superimposes its cost factors.
Opening the retail industry to FDI will bring forth benefits in terms of advance employment, organized
retail stores, availability of quality products at a better and cheaper price. It enables a countries product or
service to enter into the global market.
"There are many factors contributing to the boom in this sector. To name a few, increased
consumerism with a capacity to spend on luxury items and increased spending power in the hands of
Indians. More Indians are travelling abroad and are exposed to different cultures and way of life and
thereby more brands. India's internal consumption is also high and the consumption pattern owning to
diversity in culture, religion and the family values that encourage spending on specific occasions keeps
the retail business well oiled. Marriages add a big dimension to the retail spends. Our culture expects a lot
of give-and-take for marriages, festivals and other important events of life. Hence, it's imperative for
people right from rural to the urban, irrespective of their caste and creed or economic status, to spend on
gifts as a part and parcel of life. And that's the reason worldwide retailers eye the Indian market," says
Swati Salunkhe, managing director, Growth Centre (I) Pvt Ltd.
The size of India's retail sector is currently estimated at around $450 billion and organised retail
accounts for around 5% of the total market share. Ratings agency Fitch has assigned a stable outlook to
the retail sector for 2012 as factors like expected sales, growth-driven expansion and efficient working
capital management are likely to benefit retail companies . It is estimated that the retail sector would
continue to grow at 10-12 % per annum, which is extremely encouraging when the country's economy is
only projected to grow at 6%.