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Indian retail sector projected to touch $700 bn by 2020, states report
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Saturday, 09 September, 2017, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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A Federation of Indian Chambers of Commerce and Industry (FICCI)-Deloitte report, titled Konnected to Consumers and dedicated to the retail, fast-moving consumer goods (FMCG) and e-commerce industries, stated that the retail sector in India was projected to touch the 700-billion mark by 2020.
It was released by Harsimrat Kaur Badal, minister for food processing industries, at Massmerize 2017, the seventh essay of the two-day conference, which was dedicated to the three aforementioned sectors and organised by FICCI.
According to the data-intensive report, the consumer industry is one of the most dynamic and amongst the fastest-growing industries in India.
Consumer retail forms an integral part of the industry with a current estimated size of over Rs 45 trillion.
It is further expected to witness a compound annual growth rate (CAGR) of over 10 per cent between 2016 and 2021 to reach a size of Rs 85 trillion by 2021.
Thus, it plays a pivotal role in the growth story of Indian economy through noteworthy contribution towards the national gross domestic product (GDP), attracting significant foreign investments and technologies, and generating vast employment opportunities.
According to the data-intensive report, India will become the fifth-largest consumer market in the world by 2030.
Such optimism is well founded and makes India attractive to FMCG firms and retailers, but challenges remain.
Amongst the key challenges are poor basic infrastructure and a complex multi-layer regulatory and taxation regime.
Curbing food wastage
She underlined the need for greater synergy between the government and industry to channelise efforts to reduce food wastage in India and raise the the quality and quantum of processed food, currently reckoned to be 10 per cent of the farm produce.
The minister also urged the industry to cash in on the advantages offered by mega food parks, all 42 of which will become functional in the next three months at the meet, whose theme was Konnected Consumers.
Badal added that the food processing sector, which churns out 70 per cent of the food products retailed in the country, was one of the largest job-generating industries and an important instrument in stabilising food processing.
She said, “The government has taken several steps to reduce food wastage, the latest reform being the rollout of the Goods and Services Tax (GST), which will remove roadblocks to transportation of food, including perishables.”
World Food India
The minister invited retailers and FMCG and e-commerce players to participate in large numbers in the World Food India exposition, slated to be held on the India Gate lawns in New Delhi between November 3 and 5, 2017.
Industry professionals, representing the entire food supply chain, state governments and experts from 30 countries will have an opportunity to interact with top business leaders, government officials and delegates at the event.
A highlight of the exposition would be a vibrant Food Street, where food product manufacturers from India and overseas would be able to test-market their wares and know first-hand whether they appealed to the Indian palate or not. Badal urged multinational corporations (MNCs) to test Indian waters at the event.
FAPRA FICCI’s overseas partner
Lorenzo Enchong Formoso, chairman, Federation of Asia-Pacific Retailers’ Associations (FAPRA), informed the delegates that the federation, which was founded in 1989, has implemented its activities and developed itself with the aim of discussing issues shared in the region and promoting information exchange and friendship, thereby contributing to the development of commerce and the improvement of retailers’ status and the citizens’ lives in the region.
FAPRA consists of the recognised national retail trade organisations in 18 member-economies - Australia, China, Chinese Taipei, Fiji, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Mongolia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, Turkey and Vietnam.
He said that from India, FAPRA has partnered with FICCI, and was keen on learning the lessons that Indian industry had for the benefit of consumers in the Asia-Pacific region.
Trends
A I Rajwani,managing director and chief executive officer, P&G India, said that the retail industry was now driven by mega trends such as the rise of the individual, the fall of the household in the choice of brands and the convenience of the customer.
“In India, there is room for retailers of all sizes, big or small, and called upon the industry to press for responsible regulation, commitment to sustainability, corporate social responsibility (CSR), consumer and employee safety and inclusion of the people,” he added.
Harish Bhat, brand custodian, Tata Sons Ltd, spoke of the trends that marketers needed to leverage.
These are the health and wellness of the consumers, clean and green products for the environmentally-conscious consumer, civic and social responsibility and the pride in India and Indian traditional products and values, that is sweeping across the country.
Anshu Budhraja, chief executive officer, Amway India, emphasised on two mega trends that will define the connected consumers - the first being the rise of the freelancer which was generating a new cycle of innovation in retail, and the second, the massive digitisation across the country.
Consumer education paramount
Sanjeev Navangul, managing director, Janssen India, pharmaceutical division, Johnson and Johnson, highlighted the critical importance of educating the consumers and making them aware of making the right choice.
Consumers’ welfare should be paramount as this alone would lead to higher consumption, production, growth and creation of jobs.
Navangul called upon the government to consider inclusion of a blue dot on packaged foods to indicate the diabetic-friendly nature of the product.
Ease of doing business tangible
Krish Iyer, chair, president and chief executive officer, Walmart India Pvt Ltd, and retail and internal trade committee, FICCI, outlined the important developments that have taken place for the growth of the economy and the retail industry.
These included the ease of doing business, the results of which were being seen on the ground.
Iyer said his company was committed to working with the states to prune the gestation period for setting up of retail stores in India.
“GST was a short-term challenge, as small retailers have accepted that GST is necessary and digitisation is the way forward,” he added.
“The retail sector had set in train a virtuous cycle of growth and job creation,” Iyer said.
Retail in India fragmented
Jamshed Daboo, managing director, Trent, and co-chair, FICCI Retail, said, “Retail in India was exemplified by fragmentation, segmentation and inclusion. The need of the hour is to chart a long-term sustainable growth path and good quality retail.”
“The most important aspect of retail today is that growth is not to the exclusion of the small player,” he added.
“The Indian market is huge, and there should be no fear of replacement of the small by the big,” Daboo pointed out.
He called for systematic and pragmatic framing and implementation of consumer protection laws.
Sanjaya Baru, secretary general, FICCI, expressed the chamber’s commitment to work with the government to uphold the interests of the consumers and the industry.
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