The Growth Story of the Apparel Industry in India

Background

The apparel industry in India has undergone a remarkable transformation over the past decade, evolving from a largely unorganized sector to a dynamic market with a strong global footprint. This growth has been driven by multiple factors such as rising incomes, changing consumer preferences, technological advancements, and government support. Let’s delve into the key drivers shaping the future of this industry.

1. Rising Disposable Income and Changing Lifestyles

Over the past decade, India’s economic growth has lifted millions into the middle class, significantly increasing disposable incomes. According to the World Bank, India’s per capita income has nearly doubled since 2011. With more money to spend, consumers are shifting their focus from basic needs to aspirational products like apparel and accessories.

This shift is most evident among younger consumers who are more fashion-conscious and heavily influenced by global trends. A study by Boston Consulting Group (BCG) found that 40% of millennials in India spend a higher proportion of their income on clothing than previous generations . This trend is driving demand for both international brands and innovative local labels.

2. Shift from Unorganized to Organized Retail

Traditionally, the apparel market in India was dominated by small, unorganized local stores. However, in recent years, the market has shifted towards organized retail formats such as shopping malls, branded stores, and online platforms. According to the Retailers Association of India, the organized retail sector has been growing at a rate of 20-25% annually, compared to just 5-7% growth in the unorganized sector .

This shift has brought efficiencies, quality, and consistency in supply, providing consumers with more choices and better shopping experiences. Moreover, the penetration of organized retail has also boosted the expansion of private labels and exclusive brands, further diversifying the apparel offerings in the market

Read the Zomato Growth Story from here.

3. E-commerce Boom: A Game Changer

The e-commerce revolution has significantly reshaped the dynamics of the Indian apparel industry. Platforms like Myntra, Flipkart, Amazon, and Ajio have transformed how Indians shop for clothes. As per a report by India Brand Equity Foundation (IBEF), the online fashion retail market is expected to reach $14 billion by 2024, growing at a compound annual growth rate (CAGR) of 25% .

The COVID-19 pandemic accelerated this trend, with consumers increasingly comfortable shopping online. E-commerce platforms offer a vast array of options, easy return policies, and attractive discounts, making online shopping a preferred choice for many. The rise of digital payment methods and improved logistics infrastructure has further facilitated this shift.

4. Government Initiatives and Policy Support

The Indian government has introduced several policies to support the apparel industry. Initiatives like “Make in India” have encouraged local manufacturing, while the Goods and Services Tax (GST) has streamlined tax structures, making it easier for companies to operate across states. According to the Ministry of Textiles, schemes like the Rebate of State and Central Taxes and Levies (RoSCTL) have made Indian apparel more competitive in global markets .

Additionally, the government has been focusing on boosting exports through policies aimed at creating more employment opportunities and enhancing production capabilities. The Production Linked Incentive (PLI) scheme for textiles, for example, is expected to attract over $2 billion in investments and create around 7.5 lakh jobs .

5. Growth of Domestic Brands and Designers

Indian brands and designers have been making their mark both locally and globally. A blend of traditional Indian textiles with contemporary styles has helped local brands like FabIndia, Biba, and Manyavar cater to a wide range of customers from various economic backgrounds. This trend has been supported by the growing demand for “Made in India” products, which resonate with national pride and cultural identity.

A report by Technopak Advisors noted that the Indian ethnic wear market is expected to grow at a CAGR of 10% over the next five years, driven by increasing demand from both domestic and international markets .

6. Increasing Global Presence

India’s apparel industry is not just thriving domestically but also making significant inroads into international markets. With increased investments in technology and compliance with global standards, Indian companies have become preferred partners for global fashion brands. According to the Apparel Export Promotion Council (AEPC), India’s apparel exports are expected to reach $30 billion by 2025, supported by demand from markets like the USA, Europe, and the Middle East .

The global recognition of Indian textiles and garments, coupled with strategic partnerships with international brands, has opened up new growth avenues for Indian apparel players.

7. Focus on Sustainability and Innovation

As consumers become more conscious of environmental issues, there is a growing demand for sustainable products. Indian brands are increasingly adopting sustainable practices such as using organic cotton, reducing water usage, and recycling materials. According to a report by McKinsey & Company, the demand for sustainable fashion is expected to grow by 15-20% annually .

Brands are also investing in innovation to cater to evolving consumer preferences. Developments in textile technology, such as moisture-wicking fabrics, anti-odor clothing, and smart textiles, are helping brands differentiate themselves and capture new market segments.

8. Urbanization and Changing Consumer Preferences

Urbanization is playing a critical role in transforming the apparel market in India. As more people move to cities, their lifestyle and preferences evolve. Urban consumers are exposed to global fashion trends through social media, travel, and increased connectivity, driving demand for varied and stylish apparel options. According to the United Nations, India’s urban population is expected to grow by 200 million by 2030, creating a massive opportunity for apparel brands .

9. Growth of Regional Markets

While major cities like Mumbai, Delhi, and Bangalore have traditionally been the fashion hubs, recent years have seen significant growth in regional markets. Tier-II and Tier-III cities are experiencing a surge in demand for branded apparel, driven by higher disposable incomes and greater exposure to global trends through digital media. A report by Nielsen highlights that these markets now account for nearly 45% of the total fashion sales in India .

Conclusion

The growth story of the apparel industry in India is one of remarkable transformation and resilience. Driven by a combination of economic growth, changing consumer behavior, technological advancements, and supportive government policies, the industry is poised for a promising future. As India continues to expand its presence in both domestic and international markets, the apparel sector offers numerous opportunities for growth and value creation.

Sources

1. Boston Consulting Group (BCG) Report on Indian Consumer Trends.
2. Retailers Association of India – Annual Retail Report.
3. India Brand Equity Foundation (IBEF) – E-commerce Market Report.
4. Ministry of Textiles, Government of India – Apparel Industry Updates.
5. Press Information Bureau – Production Linked Incentive (PLI) Scheme for Textiles.
6. Technopak Advisors – Indian Ethnic Wear Market Analysis.
7. Apparel Export Promotion Council (AEPC) – Export Growth Projections.
8. McKinsey & Company – Report on Sustainable Fashion.
9. United Nations – World Urbanization Prospects.
10. Nielsen – Consumer Insights on Regional Fashion Markets.