Indian retail to grow to 1.3 trillion US dollars by 2020

The Indian retail market is expected to grow from currently 925 billion US dollars to 1.3 trillion US dollars in the next five years and India's GDP is predicted to grow at 8 percent over the next three, making it the "world's fastest-growing major developing market" according to A T Kearney's 2015 Global Retail Development Index.

"Consumer and investor sentiment have seen an uptick, as the pro-reform government under Prime Minister Narendra Modi sets out on an ambitious goal of improving its Ease of Doing Business ranking from 142nd to 50th in the next two years," said the report.

India managed to climb five ranks from 20th to 15th spot in the latest edition of the index. "India represents a good opportunity for international retailers in single-brand retail, cash-and carry and e-commerce, as the country appears to be on the cusp of a strong growth phase over the next five years," finds the report.

Key to retail growth will be the country's handling of foreign direct investments (FDI) for multi-brand retail, a hurdle that has been tough on international retailers like Walmart and Ikea.

After much back and forth, Ikea finally plans to open its first store in Hyderabad and H&M will finally catch up to rival Zara and enter the market with 50 new stores. The Japanese sportswear companies Asics and Mizuno are also planning try their luck in India.

While quality mall spaces, internet penetration and infrastructure remain challenges, they also offer great opportunities: e-commerce, growing at 27 percent, currently makes up only 0.5 percent of the retail market.