With the cabinet's approval of 100 percent FDI in single-brand retail via automatic route being welcomed by many key stakeholders in the industry, in a big push to the sector, a recent report by CRISIL has suggested that organized retail in India will rise to 10% in the next two years. The rating agency in its latest report expects the market share of organized retail to grow by 3%, a significant increase from 7% in the last fiscal.
Further, it stressed that the growth in the sector will also lead to healthy growth prospects and the rise in the sector will be supported by the government’s decision to permit 100% foreign direct investment (FDI) in single-brand retail and relaxation in sourcing norms.
While CRISIL had expected the market share of organised retailers to grow to 9% by fiscal 2020, it maintained that change in rules and healthy revenue growth of 18% of organised brick and mortar retailers.
The statement, said, “Under the new guideline, it has been decided to permit single-brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning April 1 of the year of the opening of the first store against the mandatory sourcing requirement of 30 percent of purchases from India.”
A better operating environment for single-brand retail would also mean the pace of store additions by organised retailers will be faster than the annual 10-12%, CRISIL had forecasted earlier.