The Indian retail sector is expected to grow at 7% by 2010-11, according to projections made by the Associated Chambers of Commerce and Industry of India (Assocham) and reported by www.myiris.com. This growth will enable the retail sector to enlarge its market share to US$280 billion from its present estimated level of US$ 200 billion.

Assocham President Anil K. Agarwal has revealed that organised sector retailing is set to grow at a much faster clip than the unorganised sector and that the higher growth rate will alone be responsible for its higher market share, which has been projected at US$17 billion by 2010-11.

Mentioning Mumbai, Delhi, Chennai, Kolkata, Bangalore and Kanpur as cities that will experience the retail boom, Agarwal noted that the popular model adopted for building shopping malls in these cities is build-operate-lease or sell.

This system, according to Assocham, will lead to closer linkages between real estate developers, state governments, financial institutions and retail industry. Assocham estimates that the investment opportunities the retail sector will create in the next 4-5 years will result in continued urbanisation and in the steady growth of the per capita income of Indians.

The growth of the retail sector will lead to a stronger shift towards a service economy in which the need for real estate will be paramount, Agarwal said. The Assocham study also indicated that franchising will emerge as the popular mode of retailing because there will be a proliferation of brands.

Pointing to the stumbling blocks restricting the growth of the retail sector, the study lists high stamp duty on property transfers, which varies from state to state. On the domestic taxation front, sales tax rates differ across the states and they have made supply chain management a challenging task for organised retailers.

In addition to state taxes, local authorities levy octroi. All these things put together cause irritation and therefore restrict economic growth. If retailing has to grow, the government will have to initiate corrective measures to correct these anomalies and lure investment, the Assocham study says. It urges the government to encourage People of Indian Origin (PIO) to invest in real estate and township building. It also makes a strong case for the opening up of foreign investment in real estate and retailing.

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