According to the 2016 Global Retail Development Index (GRDI) reports, India ranks at second on ease of doing business. GRDI ranks the top 30 developing nations for retail investment from all across the world. The list released by GRDI is based on several criteria such as GDP growth and clarity regarding FDI regulations.
India has jumped 13 positions in one year to rank second this time. China has retained its top position by being at number 1 this year as well.
Debashish Mukherjee, co-head of the Consumer Industries & Retail Products Practice for India and Southeast Asia and a partner with A T Kearney, says that India’s strong ranking has boosted up the optimism of foreign retailers in India’s retail market and its vast growth potential. He also told that India has approved many FDI rules regarding single brand retail, which has made it easier for foreign retailers to enter the Indian market.
India’s retail sector has also expanded at a compound annual growth rate of 8.8 per cent between 2013 and 2015. The annual sales are crossing the USD 1 trillion mark. Also, India is the world’s fastest growing economy.
However, there still remain some issues that may trouble retailers such as labour laws, complex regulations, high labour attrition rates, infrastructure and limited high-quality retail space.
Mukherjee said that it is expected that a growth in e-commerce will propel the growth of India’s retail sector as well. India has the world’s second largest internet market. The increasing internet and smartphone usage in India is also contributing to further expansion of ecommerce. According to the report, Indian consumers have got pretty comfortable with shopping online. Even venture capital and private equity firms are investing in this sector now.