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Retail finance to fuel sector growth

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Retail finance to fuel sector growth

AT $200 billion (around Rs 9 lakh crore), Indian retail is definitely sizable, but the concern is that only 2 per cent of this falls under the organised sector.

Recent studies indicate that the organised portion of the country's retail business is set to climb to 7 per cent even as the industry, per se, grows by over 35 per cent.

Fuelling this growth like no other individual sector would be retail finance, which, having transacted business worth Rs 1,00,000 crore during the last fiscal, is expected to touch Rs 1,40,000 crore in 2004-05.

Playing a crucial role in this growth is ICICI Bank, which accounted for 30 per cent of the business. Talking to Business Line, Ms Chanda Kochhar, Executive Director, ICICI Bank, said the need of the hour was to handhold the Indian retail business as it hit the maturity curve and quell fears that this is one bubble that is ready to burst.

To this effect, the bank is coming out with a white paper on the sector at the India Retail Summit being held here over the weekend where the who's who of the sector is getting together to take stock and spell out strategy for the future, she said.

"Retail in India has grown beyond mere retailing as it now encompasses sectors such as telecom, automobiles and finance. Each of these sectors have impacted the lifestyles of the Indian people like never before and it is retail that has played a major role in market penetration. Retail finance has been the true catalyst for this change and it is ICICI Bank that has played a historical role in ushering in this change and has had a multiplier effect of the country's GDP," Ms Kochhar said.

ICICI Bank, with an outstanding book size of Rs 40,000 crore as of September 30, 2004, sees the current fiscal to be a trail-blazer, having grown from Rs 29,000 crore on March 31, 2004.

The disbursements during the first six months of the fiscal have grown by 55 per cent at Rs 18,200 crore from Rs 11,500 crore in 2003-04.

The ICICI Bank study on the Indian retail industry, essentially an assimilation of some of the existing sectoral studies, focuses on three aspects: macro-economic profile of the Indian economy; growth drivers for the retail industry and consumer behavioural patterns.

"We are reiterating the fact that growth for Indian retail industry is coming out of fundamental changes in the Indian demographic profile. This includes aspects such as income, age and consuming habits. The other area is the proliferation of shopping malls, need for speciality stores and the future for the neighbourhood kirana stores. The study has also delved into logistics management and smart HR practices," Ms Kochhar said.

Clearly, more and more business houses in the country are turning to retail, either in a bid to leverage their prime property holdings or out of a genuine desire to enter this sector. Even as the Indian corporates come to terms with the advantages of connecting directly with the consumer, FDI in retail would be as much important as studying the changing profile of the Indian consumer.


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