India fifth most attractive retail market

New Delhi: Despite the recent flip-flops over enhancement of FDI cap in the retail sector, India has emerged as the fifth most favorable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia.

"India remains a high potential market with accelerated retail growth of 15-20% expected over the next five years. Growth is supported by strong macro economic conditions, including a 6-7% rise in GDP, higher disposable incomes, and rapid urbanization," said a recent report by global management consultancy firm A T Kearney.

The approval of 100% FDI in single brand retail, especially, will give a fillip to the sector in the country prompting several international retail chains to explore the market either on their own or through local partners, the report said.

Companies such as GAP, IKEA, Abercrombie & Fitch have already stepped up inquiries for an entry into the market, despite the rider of 30% local sourcing for single brand foreign retail chains.

According to the entity's Global Retail Development Index (GRDI) 2012, India ranks fifth after Brazil, Chile, China and Uruguay.

With the developed markets witnessing an economic turmoil, emerging countries are fast becoming the retail hotspot for foreign brands, with most of them seeing faster growth here compared to their home markets.

In the past five years, retail chain giants like Walmart, Tesco, Metro Group, saw revenues in developing countries grow 2.5 times faster than their home markets, the report said.

Even in the food and beverage industry, India is fast becoming an important investment destination for foreign players with companies like Starbucks which is planning to enter India this year and American brand Dunkin' Donuts which recently entered the country in partnership with local franchisee Jubilant FoodWorks.