Rating agency CRISIL expects the market share of organised retail in India to rise to 10 per cent by the financial year 2020, compared with 7 per cent last fiscal.
This will be supported by the Government’s decision to permit 100 per cent foreign direct investment (FDI) in single-brand retail under the automatic route from 49 per cent earlier, relaxation in sourcing norms, and healthy growth prospects for organised retail, it said in a statement
Before the change in rules, CRISIL had expected the market share of organised retailers to grow to 9 per cent by fiscal 2020, based on healthy revenue growth of 18 per cent of organised brick-and-mortar retailers.
The cabinet’s approval of 100 per cent FDI in single-brand retail via automatic route has been seen as a progressive step by many in the industry, a move which will help attract a lot of foreign investment and also enhance ease of doing business in the country.
Under the new guideline, it has also been decided to permit the single-brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning April 01 of the year of the opening of the first store against the mandatory sourcing requirement of 30 per cent 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 per cent, CRISIL had forecasted earlier.