New Delhi, April 30:

India has emerged as the most attractive global retail destination for a second straight year, ahead of rival China which trails in fifth place, states a new study by global consultancy AT Kearney.

“India is at the peak of attractiveness for retailers right now with a $350 billion retail market expected to grow by 13 per cent this year,” says Fadi Farra, who headed the study by global consultancy AT Kearney. The annual study ranks India in top spot followed by Russia in second place, Vi-etnam third, Ukraine fou-rth and China fifth, down one spot from last year.

“The Indian retail market is gradually but surely opening up while China’s market becomes increasingly saturated,” a trend fuelled by international retailers, says Farra. The study released late last week rates nations on such factors as market saturation, political risk and economic growth.

Besides having a population of over one billion, a fast-expanding middle class and a strongly growing economy, India’s retail sector is deeply fragmented, dominated by the ‘unorganised sector’ — small family-run stores. ‘Organised’ large-scale retailers account for two to three per cent compared to 20 per cent in nations like China and Thailand.

This is what is making foreign companies as US-based Wal-Mart, the world’s largest store chain, and British supermarket giant Tesco, among others, take notice of India, the study states. While rules still bar foreign direct investment (FDI) in most of the sector, foreign retailers’ hopes have been buoyed by a February government decision to allow FDI of up to 51 per cent in single-brand retailers such as shops selling Nike sportswear or Nokia handsets. “This is a significant break for global retailers and will spark a flurry of investment,” predicts the report. But the relaxed regulations do not extend to companies that sell a variety of brands.

Last week, commerce minister said India was working to open the ‘next window’ in the retail sector and an announcement would be made in June. The aim is to ensure the entry of big players generates new jobs rather than destroys existing ones, he says, adding “the issue is not about FDI in retail, but big versus small retailers.”