India’s retail market is on course for a significant transformation, with its size projected to more than double to Rs 210 to 215 trillion by 2035 from approximately Rs 90 to 95 trillion in 2025, according to a joint report released on Monday.
The study, unveiled by Boston Consulting Group and Retailers Association of India at the Retail Leadership Summit 2026 in Mumbai, highlights the powerful consumption momentum shaping the sector and underscores the growing role of artificial intelligence in defining the next decade of retail expansion.
Strong Consumption Momentum Fuels Retail Growth
India continues to rank among the fastest growing major economies globally, with GDP growth of 8 per cent in 2025. The report attributes the retail sector’s expansion to strong private consumption, particularly in discretionary and services spending.As India advances towards becoming the world’s third largest economy by 2030, the retail industry is expected to benefit from sustained economic growth and rising consumer demand. The report outlines how structural shifts in the economy and evolving consumer preferences are creating new opportunities for retailers to scale and innovate.
AI Emerging as Core Driver of Retail Transformation
A key theme of the report is the transformative role of artificial intelligence across the retail value chain. AI is no longer limited to enhancing customer-facing experiences but is increasingly reshaping core functions such as merchandising, supply chain management, marketing, and customer service.According to the findings, a full-scale, function-led AI transformation can unlock performance gains ranging from 40 per cent to 60 per cent. In contrast, isolated AI applications typically deliver improvements of only 10 per cent to 15 per cent.
The study also highlights that nearly 70 per cent of the value generated from AI initiatives comes from strengthening internal capabilities, redesigning processes, and implementing effective change management, rather than from technology deployment alone.
Strategic Choices Will Define the Rs 200 Trillion Opportunity
Abheek Singhi, Managing Director and Senior Partner at Boston Consulting Group, said India’s retail sector is poised to expand into a nearly Rs 200 trillion opportunity over the next decade.Bharat Mimani, Managing Director and Partner at Boston Consulting Group, stated that retail is entering a decisive phase where AI is becoming a core driver of competitive advantage instead of remaining a peripheral experiment.
Kumar Rajagopalan, CEO of Retailers Association of India, emphasized that the next decade’s Rs 200 trillion opportunity will not be captured through sales growth alone. He said retailers must embed AI across the entire shopper journey, rebuild talent and operating models, and treat transformation as an ongoing discipline rather than a one-time initiative.
Structural Shifts Reshaping Indian Retail
The report examines broader structural changes in Indian retail, including evolving consumer behavior and the strategic decisions required to remain competitive in a rapidly changing environment.As technology becomes deeply integrated into retail operations, businesses that combine strong consumption demand with comprehensive AI adoption are expected to lead the sector’s next phase of growth.
With market size projected to more than double by 2035, India’s retail industry stands at the threshold of a transformative decade driven by economic expansion, digital adoption, and function-led AI integration.
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