India Retail 2025 Review & 2026 Growth Outlook by RAI

Spokesperson: Kumar Rajagopalan, CEO, Retailers Association of India

Review of Indian Retail in 2025

India’s retail sector demonstrated strong and steady growth in 2025, driven by improving consumer sentiment, favorable policy initiatives, and broad-based performance across categories. After a mild start to the year, demand accelerated steadily, culminating in a festive season where overall sales grew more than 11% year-on-year.

Categories such as food & grocery, footwear, jewellery, quick-service restaurants (QSR), and value fashion performed exceptionally well, benefiting significantly from GST rate cuts that lowered prices for everyday essentials.

A notable trend in 2025 was the rise of Bharat’s consumption engine. Expansion in Tier II and III cities fueled store openings and category growth, with consumers in smaller towns showing the same appetite for branded, quality products as those in metros. The omnichannel model matured further, with shoppers seamlessly moving between online research and offline purchases. Yet, the majority of transactions continued to occur in physical stores, reinforcing India’s “phygital” retail reality.

Policy developments also influenced the sector. Income-tax relief and GST rationalisation supported consumer spending, while the rollout of national labour codes marked a significant step toward formalizing employment for retail’s large frontline workforce.

2026 Outlook: RAI’s Perspective

Looking ahead, the Retailers Association of India (RAI) anticipates that 2026 will accelerate growth across the sector, underpinned by policy stability, higher disposable incomes, and continued expansion into new markets.

RAI’s priorities for the year include:

Simplified Ease of Doing Business: Implementation of a unified One Nation, One Retail Licence with single-window clearances to reduce compliance burdens and speed up store expansion across states.
Policies That Boost Consumption: Continued GST rationalisation and tax measures aimed at putting “more money in people’s hands,” sustaining mass-market demand—especially important after the recent GST cuts that enhanced household purchasing power.
Strengthening Phygital Infrastructure: Investment in logistics, broadband, digital payments, and ONDC to help retailers of all sizes adopt technology and reach customers nationwide.
Clear, Consistent Regulations Across Channels: Fair-play guidelines for e-commerce, clarity on marketplace practices, and smooth implementation of the new labour codes.

The competitive landscape is evolving as well. New entrants are experimenting with social commerce, online marketplaces, and gradually becoming omnichannel retailers. With GST reforms stimulating demand and value-driven categories poised for sustained growth, RAI expects healthy sales growth in 2026, led by mass-market expansion, physical retail development, and a more mature omnichannel ecosystem.