Retail Sales in India Rise 5% in January 2025, Driven by Food & Grocery Growth

Retail sales in India saw a 5% year-on-year increase in January 2025, reflecting steady growth in the sector, according to the latest Retail Business Survey by the Retailers Association of India (RAI). The rise was primarily driven by strong performance in the food & grocery segment, which surged 13%, alongside stable demand across key retail categories.

Regional Performance

West India led retail growth with a 7% rise, fueled by robust urban consumption and post-festive season spending in Maharashtra and Gujarat. North and South India each recorded 5% growth, supported by stable demand in major markets like Delhi-NCR and Tamil Nadu. East India lagged slightly, posting a 4% rise, likely due to restrained discretionary spending.

Kumar Rajagopalan, CEO of RAI, attributed the sector’s resilience to increased consumer spending, influenced by the Union Budget 2025’s decision to raise the income tax exemption limit to ₹12 lakh. This policy move has enhanced middle-class disposable income, supporting higher retail spending.

Category-Wise Growth

• Food & Grocery: Leading the retail surge with a 13% increase, driven by rising household consumption and growing preference for organized retail.

• Consumer Durables & Quick Service Restaurants (QSRs): Both categories expanded by 6%, reflecting urban demand for electronics, home appliances, and dining out.

• Apparel & Footwear: Registered a 4% growth, benefiting from seasonal sales but still below pre-pandemic levels.

• Jewelry: Saw a 3% rise, backed by wedding season purchases and investment buying due to high gold prices.

• Beauty & Wellness, Sporting Goods: Grew 2%, indicating steady niche demand.

• Furniture & Furnishing: Posted the lowest growth at 1%, reflecting slow recovery in home improvement spending.

Trends and Market Outlook

India’s retail industry has maintained a 5% growth rate since December 2024, showcasing steady consumer confidence. Factors such as rising disposable incomes, urbanization, and digital payment adoption—exemplified by UPI’s 14 billion transactions in May 2024—are fueling long-term expansion.

The Union Budget 2025’s tax relief is expected to further boost discretionary spending, particularly in the upcoming summer and festive seasons. Additionally, global brands like Decathlon and IKEA are ramping up investments in the Indian market, signaling confidence in its growth potential. Organized retail, valued at $156 billion, is projected to reach $328 billion by 2030, according to an IMAGES Group report.

Challenges & Opportunities

Despite positive trends, inflation in food and beverage prices (7.23% in December 2023) continues to impact consumer budgets, potentially slowing non-essential spending. Supply chain challenges and technological upgrades remain key hurdles for small retailers. However, India’s e-commerce sector, projected to reach $350 billion in GMV by 2030, along with increasing digital payment penetration, presents major growth opportunities, particularly in tier-2 and tier-3 cities.

With India’s retail market expected to hit $2 trillion by 2032, per a Boston Consulting Group report, the sector remains a dynamic landscape for domestic and international retailers alike.