FDI can scale modern retail sector to Rs 3.5 trillion by 2015: Crisil
Mumbai: The penetration of the domestic organised retail sector will increase from the current 6.5 percent to nine by 2015, if the proposed move to allow foreign direct investment (FDI) in retail sector is implemented quickly, according to leading rating agency Crisil.
The organised retail market is expected to be Rs 3.5 lakh crore from the present Rs 1.4 lakh crore, the agency said in a report.
The domestic retail market currently is estimated to be Rs 21.6 lakh crore and by 2015 it is likely to touch Rs 37 lakh crore, Crisil added.
The government is in the process of allowing 51 percent FDI in multi-brand modern retail, though a consensus is yet to be reached.
"Today there is moderate competition; we feel there will be increased competition very soon. Once foreign players enter, the competitive landscape is expected to change," Crisil Head for Industry Research Ajay D'Souza told reporters here.
Crisil envisages the competition to be higher in metros during the next five years as it expects hypermarkets to open more stores in these areas initially.
"In future, we see expansions in the hypermarket formats. In case of speciality stores, action will be focused in apparel, footwear, jewellery and to a lesser extent consumer durables. The competitive landscape is going to be much higher in cities.
In terms of the metros and mini-metros, if we look at the seven large cities (Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad and Pune), we believe the organised retail penetration is going to grow the fastest in the next five years.
"We expect organised retail penetration in these cities to be close to 33 percent by 2015 from the current 28 percent in FY11. In tier-1 and tier-2 cities it won't be that large relative to these seven large cities," D'Souza added.