Youth-Driven Retail Revolution: Budget 2025’s key role in growth

The retail sector’s transformation is not just a story of economic growth; it is a story of India’s youth.

By Aastha Almast 

India's retail sector is undergoing a transformation. The landscape, once dominated by kirana stores, is now shifting towards organised retail—a trend that is spreading to tier 2 and tier 3 cities. There is a huge opportunity for this transition to evolve into a youth-led retail revolution at scale. However, the success of this transformation depends on strategic investments and a supportive policy environment.

The Union Budget 2025 is expected to play a pivotal role in this transformation. With India’s projected GDP growth at 6.4%, which is lower than expectations, the government can potentially introduce several initiatives to stimulate the retail and consumer sectors. Employment-linked incentives, tax reliefs, affordable financing, and enhancements to infrastructure – both physical and digital - are key measures that promise to support this sector’s expansion.

If executed well, these initiatives could help address India’s twin issues of unemployment and underemployment and even foster a wave of youth-led entrepreneurial ventures through models such as retail franchising, in every corner of the nation.

Youth Employment and Entrepreneurship

With over 365 million Indians aged 15-29, the intrinsically labor-intensive retail sector presents a unique opportunity to drive youth employment and entrepreneurship, particularly in tier 2 and tier 3 towns. Organised retail, poised to grow at a CAGR of 19-21% and surpass $1.8 trillion by 2030, can absorb millions of job seekers, bringing in its fold unorganised retail, which employs an estimated 8% of the Indian workforce. By addressing structural challenges through measures such as rationalising GST rates, tax relief, affordable financing, and targeted skill development programs, the government can empower young Indians to lead in retail innovation.

An often-overlooked aspect in Indian retail is the tremendous entrepreneurial opportunity of a robust franchising economy. Recognising franchising as an industry and providing government-backed loans could enable young Indians to transition from unskilled labor to business ownership. Franchising has the potential to transform India’s unskilled workforce into entrepreneurs, as seen in global examples like the US, where franchising initiatives are supported by measures such as government-backed loan products.

Balancing Digital and Physical Infrastructure Development

India’s infrastructure has seen significant improvements in recent years, with investments in airports, railways, highways, and transit hubs creating fertile ground for retail growth. Prioritising further development in transit hubs and urban spaces could unlock significant opportunities for convenience-driven retail. To put the opportunity in numbers, transit retail is projected to become a $22 billion industry by 2030 (Knight Frank India Report).

While digital infrastructure investments are vital, physical infrastructure remains equally important. Additionally, regulating quick commerce platforms to ensure fair competition can protect traditional retailers while encouraging innovation.

Rural Markets: The Next Growth Frontier

Rural India accounts for 35% of FMCG sales and is experiencing robust growth, with volume sales increasing by 6% annually. Initiatives like tax incentives for rural retail businesses and an FMCG Rural Growth Fund can strengthen distribution networks and boost local economies.

By fostering rural retail hubs and enhancing physical infrastructure in tier 2, 3 and tier 4 towns, the government can create sustainable employment opportunities and improve access to goods and services.

The Night Economy:  Unlocking Potential

Globally, night economies contribute significantly to economic growth, but India lacks a framework to enable 24/7 business operations. Establishing a streamlined licensing system for 24-hour operations could unlock untapped potential, creating jobs, boosting tourism, and aligning India’s retail sector with global standards.

Sustainability as a Growth Driver

As retail gears up for significant growth, sustainability must be a cornerstone of future policies. Incentivising eco-friendly practices such as sustainable packaging, energy-efficient store operations, and green supply chains could enhance the global competitiveness of Indian retailers. R&D tax benefits for sustainability-focused innovations could drive meaningful change in this area.

The Bottom Line

The retail sector’s transformation is not just a story of economic growth; it is a story of India’s youth, their aspirations, and their potential. By aligning policy measures with the entrepreneurial spirit of young Indians, the government can unlock unprecedented opportunities for both job creation and economic development. The Union Budget 2025’s strategic focus on retail could well be the catalyst for India’s next big growth story—one rooted in innovation, inclusion, and sustainability, redefining the future of commerce.

(Aastha Almast, Co-founder of New Shop.)

Views are personal and do not represent the stand of this publication.