Retail Industry

Why the Retail Sector in India is a Trillion Dollar Industry

Why the Retail Sector in India is a Trillion Dollar Industry

The retail industry is one of the key pillars of the Indian economy that strengthens GDP growth and helps millions to gain employment.

The Indian retail sector was valued at USD$672 billion in 2017, and is expected to reach USD$1.3 trillion by 2020.

There are several factors that have contributed to this exponential growth.

1. Increase in Consumption by Consumers

Private consumption is the measure of money spent by the customers who belong to a country to purchase services and goods. It is also known as customer expenditure. It accounts for more than half of India’s GDP and hence helps in leading GDP growth in India. The equation is simple, the more you buy, the more would be the profit made by retailers, and hence more money will be in the rotation. The money spent by a consumer is used by a company to pay employees and enables a company to pay taxes.

In India, there has been a steady increase in customer consumption in the last few years. Even when India’s GDP grew at a slow rate, the consumption grew by 7-8 percent.High private consumption also helped India stay protected from the recession as it reduced Indian dependence on income from exports. Increased consumption by consumers also pushed the retail sector to new heights and is still doing so.

2. Changing Demographic Profile


The demographic profiles of Indians are changing as Indians now have more disposable income than before. The government of India has played an active role to ensure it. Thankfully, the Indian government has risen the tax allowances it offers and has raised tax threshold. This ensures that people simply have more money in their pockets.

When people have more money, the retailers can cash in on the opportunity by offering lucrative products and attractive discounts. Retailers also offer more variety and increase the quality/quantity of the goods to make them more appealing.

3. Improved Business Model
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