Retailing is defined to include all the business activities relating to selling of goods and services to the final consumers. It is the final link in a product supply chain. In India, retailing is one of the fastest growing industries. It is estimated to be the largest single sector (after agriculture) both in terms of turnover as well as employment. After leading the IT bandwagon, India is poised to grow as a retail hub.

The Indian retail sector is highly fragmented with about 15 million retailers. Out of the large number of total retail outlets in the country, majority of them relate to the food items. Since 1990s, big industrial houses like Rahejas, Piramals, Tatas, etc have started entering the retail industry. Besides, several Indian and foreign companies have been franchising for establishing exclusive outlets for their brands, both within the country and overseas. For instance, 'Bharati Group' had entered into a joint venture with the world's largest retail chain the 'Wal-Mart'.

As a result, the Indian retail sector has been undergoing a rapid transformation in the past few years. The traditional formats of kirana stores, hawkers, grocers, etc are being gradually taken over by the modern formats of department stores, discount stores, malls, supermarkets, convenience stores, fast food outlets, specialty stores, warehouse retailers, hypermarkets, etc. For example, Pantaloon started the 'Big Bazaar' discount stores in 2002; Reliance opened its first supermarket named 'Reliance Fresh' outlet in Hyderabad and has since fanned out to several States; Subhiksha outlets have been fast spreading across the nation; etc. Thus, the current face of Indian retail comprising the unorganised small and medium retailers is slowly changing into a more organised form of retailing.

As per the available estimates, of the Rs. 1,330,000 crore retail market, food and grocery retail is the single largest block estimated to be worth Rs. 7,92,000 crore (with 59.5 per cent share), but the share of organised sector in this is miniscule. Clothing, textiles and fashion accessories constitute the second largest block with a 9.9 per cent share at Rs. 1,31,300 crore. But the largest segments as far as organised retailing is concerned are the timewear (48.9 per cent share) and footwear (48.4 per cent share) sectors . In 2007, the share of organised retail was estimated to be 5.9 per cent, which was Rs. 78,300 crore. This retail is expected to touch Rs. 2,30,000 crore (at constant prices) by 2010, constituting roughly 13 per cent of the total retail market. However, the modern retail segment grew at the rate of 42.4 per cent in 2007 and is expected to maintain a faster growth rate, especially in view of the fact that major global players and Indian corporate houses are entering into the market in a big way. This growth in modern retailing is linked to several factors particularly, the increasing purchasing power; rapid global interaction and integration as well as the changing consumer needs, lifestyle and attitude. Further, shopping centre business alone is estimated to become a Rs. 40,000 crore business by 2010-11.

Besides, the large organised retail segment, using sophisticated technology and communication network, offers several benefits to the consumers in the form of availability of quality products at lower prices; wider choice to the customers; shopping with convenience, space and entertainment; etc. It is also beneficial for the growth of the economy as a whole because it provides forward linkages for mass-marketing of processed and packaged goods. Its expanded reach and increased volumes translates into more manufacturing, more jobs, better standard of living and hence more prosperity.

Given the present scenario, foreign direct investment into the retail sector would further improve its productivity, competitiveness and efficiency. Such investments from abroad is a means to supplement and complement domestic efforts for :- providing opportunities for technological upgradation and access to global managerial skills and practices; optimal utilisation of human and natural resources; opening up export markets; generating backward and forward linkages; providing access to international quality goods and services; etc.

Also, India is one of the most attractive markets for retail investment. Many national and global players have been investing in the retail segment and have ambitious plans for further expansion. The vast middle class with rising purchasing power are attracting global retail giants into the almost untapped retail industry. Some of the international players already present in the Indian market include fast food chains like McDonalds and Pizza Huts; Dominos; Levis; Lee; Nike; Adidas; Benetton; Sony; Sharp;Kodak; etc.

The investment opportunities in the domestic retail industry lay in most of the product categories particularly, food and grocery (the largest category); home improvement and consumer durables; apparel and eating out; supply chain infrastructure (cold chain and logistics); etc. India also has significant potential to emerge as a sourcing base for a wide variety of goods for international retail companies.

As of now, there is no policy for foreign direct investment (FDI) in retail. The government allows 100 per cent FDI in cash and carry through the automatic route and 51 per cent in the retail trade of single brand products. Besides, the franchise route is available for the big operators. The government also proposes further liberalisation in the retail sector allowing 51 per cent FDI in consumer electronics, sports goods, stationery and building equipment. The current policy regime also bars foreign retailers from selling multiple brands directly to consumers. Also, this policy framework involves numerous licensing formalities for the retailers and hence there is a demand for a single window clearance system which makes the whole process hassle-free.

The 'Retailers Association of India (RAI)' is the voice of Indian organised and modern retailers putting forward their demands. Launched by the key retailers of the country, its founder membership comprises the leading retailers like Aditya Birla Retail Limited, Bharat Petroleum Corporation Ltd; Damas Goldfields Jewellery Pvt. Ltd; Globus Stores; Levi Strauss (India) Pvt. Ltd; Lifestyle International Pvt. Ltd; McDonald's India (West & South); Nalli; Pantaloon Retail (India) Ltd; Raymond Ltd; Reliance Webstore Ltd; Reliance Retail Ltd.; Shoppers' Stop; Subiksha Trading Services Pvt. Ltd; TCS Textile Pvt. Ltd.; Bombay Dyeing & Manufacturing Co. Ltd; Titan Industries Ltd; Wadhawan Food Retail (P) Ltd.; Zodiac Clothing Co. Ltd.; etc.

For further giving a boost to the retail segment of the Indian economy, several important steps are being taken. Like, for the first time, under the aegis of the 'India Retail Forum', the entire retail industry, Images F&R Research and some of the world's top global research and consulting firms (like AT Kearney, Ernst & Young, Price Waterhouse-Cooper, Technopak, KPMG, ICICI, AC Nielson-ORG Marg, Synovate, Cushman & Wakefield, etc) have come together for a detailed study of the Indian retail sector. The launching of the 'India Retail Report 2007 and 2009' and a portal ' http://indiaretailing.com/ ' for the retail industry are other related developments in this direction.

Going by the current growth trends, the organised retail in India has indeed gained top speed and is now on the verge of take-off. But, it is believed that the Indian format of retailing is going to retain its own touch, with numerous small retailers and other traders being located in the city centres and the large organized retailers coming up in the suburbs of the metropolitan cities. In other words, small retailers would continue to occupy a niche position as corner-side shops, because with personalised services and convenient walking distance they are able to provide a special kind of service which will always be demanded.

^ Top