NEW DELHI: India's retail sector is expected to be worth US$1.2 trillion by 2020, rising to $2.1 trillion by 2025, the Confederation of Indian Industry (CII) has forecast.

That would represent huge growth on current retail sales of $550bn and the expansion will be helped by rapid growth of ecommerce, which the industry body expects to grow from $2.9bn in 2013 to over $100bn by 2020.

According to its Indian Retail Medley report, released jointly with Wazir Advisors, the management consultancy, a number of factors will fuel the growth but the internet will be the most important.

It is estimated there will be 550m internet users in India by 2018, including 210m in rural areas, and the country also has a huge, youthful and tech-savvy population of 500m aged below 25 years-old.

Other factors include rising incomes and demand levels, urbanisation as well as attitudinal shifts, the report said, adding that the "phenomenal" and continuous rise in internet penetration is thanks, in part, to the government's commitment to digitalisation.

"India is expected to become the world's fastest growing ecommerce market on the back of robust investment activity in the sector and the rapid increase in internet users," the report stated.

But retailers will need to innovate their business model to take advantage developments and the country still faces some hurdles, warned Adesh Gupta, the chairman of CII Retail 2015 and promoter of Liberty Group.

He said India could become one of most dynamic retail markets in the world, but there remains "dire need to strengthen our supply chain management, identification of consumers' needs, trained and skilled manpower and streamlining of our taxation system".

The report chimes with a recent study from investment bank Goldman Sachs, which predicted that ecommerce in India will grow 15-fold over the next 15 years. It estimated Indian ecommerce will be worth $300bn in 2030.

Data sourced from the Confederation of Indian Industry; additional content by Warc staff