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Retail - Space for more growth

Driven by strong income growth, changing lifestyles, favourable demographic patterns, Indian retail is expanding at a rapid pace. The retail sector was valued at around Rs 11,000 crore, growing at over 30 per cent year-on-year.

Print Edition: Budget 2008 Special

Indian retail expanding
Indian retail expanding
Driven by strong income growth, changing lifestyles, favourable demographic patterns, Indian retail is expanding at a rapid pace. The retail sector was valued at around Rs 11,000 crore, growing at over 30 per cent year-on-year.

India topped A.T. Kearney’s annual Global Retail Development Index (GRDI) for the third year consecutively, as the most attractive market for retail investment. Increased retail spaces and developing infrastructure have allowed for growing operational malls.

The industry estimates the number of operational malls to double to over 412 by 2010, and further to 715 malls by 2015 on the back of major retail developments even in Tier-II and Tier-III cities. Industry majors such as Pantaloon Retail, Shoppers’ Stop and Provogue reflected healthy growth.

Major International retailers like Wal-Mart, Apple Inc, Carrefour, and Starbucks are looking to capitalise on this healthy growth by entering into tie-ups and are looking to start operations in the near future. Along with current trends, growing luxury retail and changing foreign investment policies, the retail sector looks well on its way.

 Corporate impact

  •  
    Kishore Biyani, Group CEO, Future Group
    “What’s interesting is the concession given to small cars and automobiles, which indirectly benefits us retailers; people tend to shop more when they have a car”

    Kishore Biyani
    Pantaloon Retail: A slew of new products will inundate its stores, as it has tied up with Sachin Tendulkar. But of course, what will tell immediately is the expected increase in purchasing power in the hands of consumer, thanks to IT rebate and farmer dole out

  • Shoppers’ Stop: The scrip has recorded the good news on the bourses. The rumour is that it is scouting for a buyer. But the push towards greater product definition and penetration is aiding its growth story

  • Vishal Retail: The company has plans to branch out in related segments such as quick-service restaurants, in addition to packaged water, mobile phones and consumer durables

  • Trent: This Tata Group company, which operates Westside, has acquired Landmark that should benefit from the excise duty reduction on paper, paper board and related articles

  • Koutons Retail: This retailer has already branched out of its core focus on men’s clothing and has acquired stake in Upper Class that has foothold in women’s apparel

Sectoral impact

  • Longstanding demand of the retail industry to abolish service tax on renting of immovable property remains untouched

  • Service tax on renting of immovable property clarified to include permitting use of space in any immovable property

  • General reduction in excise duty rate from 16 per cent to 14 per cent will lead to cost cutting on procurements made from manufacturers

 

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