Rise of retail industry in India can draw on experience of China consumer sector

India has replaced China as the top retail investment destination, the Hindustan Times reported recently, citing AT Kearney partner Subhendu Roy. This is not necessarily a bad thing, if the growth of the retail sector in India can be the glue that increases the closeness of Sino-Indian relations.

India’s retail sector is likely to double from $630 billion in 2015 to $1.1 trillion to $1.2 trillion in 2020 at a compound annual growth rate of 12 percent, Indian business news website livemint.com reported previously, citing a report released jointly by PriceWaterhouseCoopers and lobby group Ficci.

Driven by the expansion of the middle class, India’s rising consumer purchasing power has constituted a large part of its economic growth miracle in the past two years.

Some analysts predicted that India will grow faster than China in 2017 and again in 2018. Sino-Indian relations have reached an advanced and delicate stage, with competition and cooperation coexisting, even though competition gets more public attention. However, China is perhaps one of the driving forces behind India’s consumption spree.

Driven by several hundred million young people, India is creating a consumer market increasingly tied into high-technology consumption and the Internet economy. According to media reports, India-based online marketplace Paytm Mall and its main backer, Chinese giant Alibaba Group, are gearing up to invest in Indian online grocer BigBasket. This is the latest example of high-profile collaboration, and it shows that the prosperous market in India needs Chinese companies’ capital and marketing experience, while Chinese high-tech companies have an increasing interest in India’s burgeoning market.

This cooperation model combines China’s capital and India’s consumer market, but the two countries can do more. With India’s rise, the country has become the No.1 destination for retail investment. This is certainly a good sign, but it’s just the beginning of the story. In the early stages of its economic take-off, China relied heavily on the opening-up of its own retail market to achieve sustainable consumption growth. The question is, will India follow the path of China?

Much remains to be done in India, especially in terms of opening up the market and unification of regulations. China, as a forerunner, is willing to offer help. There is also still enormous potential for bilateral cooperation in areas such as finance, investment and Internet-based infrastructure.