Retail sector to grow 36%, says Assocham study

Indian retail is expected to grow at 36 per cent by the end of 2008 to become a Rs 14,79,000 crore market from the current Rs 5,88,000 crore, according to a study conducted by the Associated Chambers of Commerce and Industry of India (Assocham).

The study, "Retail and its Prospects", says organised retail, currently a Rs 5,000-crore market, is expected to grow only three-fold, compared with 36 per cent growth of the total sector, to become a Rs 15,000-crore market by the end of 2008, due to what the chamber calls the government's dithering on foreign direct investment in retail and the unlikelihood of the sector being opened up in the near future.

The Assocham study has projected that organised retail trade will touch Rs 1,60,000 crore by 2008, due to the expansion and diversification of organised sector in retail marketing currently under way, and rising demand.

Initiatives of all state governments and of the Centre in the form of allocation of land at concessional rates, loans on liberalised interest rates to promoters of shopping malls and rationalisation of state levies are factors that will aggressively inspire the entry of the organised sector into retailing in the next few years, according to Assocham President Anil K. Agarwal.

Assocham estimates that the retail sector, already the second largest employer, will create 50,000 jobs a year in the coming five years. Franchising and the "chain stores" concept will grow at a fast pace.

While franchises have witnessed a sales growth of 14-16 per cent per annum since 1999, chain stores have recorded a sales growth of 28 per cent per year between 1999 and 2003-04, the highest among the various organisational formats.

Real estate and infrastructure availability are among other reasons for the organised sector's major foray into retail marketing.

Factors restricting the entry of the organised sector into retailing like operating hours and trading conditions would not exist in the near future with liberalisation and growing competition among states to attract investment, said Agarwal.