The situation could turn even better once retail gets industry status and big-time investments flow in -- either from multinational chains or home-grown corporates.

According a recent survey by PricewaterhouseCoopers, the Indian retail sector is a $210-billion pie which is witnessing a healthy pace of 5% per annum. Of this, organised retail now accounts for only 3% but is expected to expand its share to 10% by 2010.

In other words, organised retail would triple its share of the Indian market in the next five years and this explains why corporates are rushing into this segment.

"It is not correct to say growth in organised retail would drive neighbourhood shops out of business. Experience of various countries shows that both segments would continue to grow unless there is economic stagnation," said Mr Jacques-Etienne de T'Serclaes, partner at PwC specialising in global retail.

India and Cuba are the only major countries where retail is not open to foreign direct investment (FDI), he said soon after releasing the report.

Titled `The Rising Elephant: Benefits of Modern Trade to Indian Economy' -- the report has been jointly done by PwC and the Confederation of Indian Industry (CII).

While apprehensions about job displacement are misplaced, consumers and the economy will benefit significantly, says the study.

 Wastage would be checked, especially in the case of food, due to improved efficiencies and establishment of logistics chains across the country.

Foreign investors would be keen on investing in India in collaboration with Indian partners, said Mr Krish Iyer, member of CII's national retailing committee and CEO of Piramyd, a Mumbai-based retailer.

Calibrated opening up of the sector to foreign investment was a good idea and the government should not keep the doors closed for FDI.

The government should also strengthen the domestic industry by granting retail the status of an industry, Mr Iyer felt. This would help in getting easier access to finance and various other problems would also be addressed.

As of now, retailers have to pay higher power tariffs as applicable to commercial establishments rather than the lower rates available for industrial consumers.

 Since FDI has been allowed in real estate, it is felt that foreign investment in retail would result in multiplier effect for the economy.

"If foreign investment can flow into real estate, it can enter retail too without harming the economy. At the current juncture, the Indian economy can sustain the growth of both organised as well as unorganised retail," said Mr N V Sivakumar, retail & consultancy leader at PwC.

The industry needs large investments -- estimated to be around Rs 25,000 crore -- to meet the growing needs of the middle class consumers and domestic investment alone may not be adequate.