Overview
India is the world’s seventh-largest market and anticipated to be in the top three global markets by 2050. India’s GDP is expected to be USD 3200 billion in 2020 and by 2050 India is foreseen to be among the top three markets of the world. The steady growth of India’s GDP has made the country’s economy stronger in comparison to others. However, due to the Covid-19 outbreak, there has been a huge decline in the GDP of India. India’s GDP is expected to be USD 3200 billion in 2020.
Source: Shopify
As per the data published by the Confederation of Indian Textile Industry (CITI), the recovery for the domestic market is assumed to be abrupt post-pandemic with the domestic market expected to reach USD 120 billion by 2024. Apparel retail is also predicted to contract by USD 27 billion in 2020-21 as opposed to pre-pandemic predictions for the same period against the USD 20 billion from2019-20.
What is the market size of the Indian Fashion Industry?
In the fiscal year 2020, the overall apparel segment size was expected to be USD 67 billion. The apparel market is predicted to rise at 10 % and touch USD 107 billion by 2025. Due to the better access, availability of products, increasing urbanization, increasing digitization and other factors have driven the growth in this segment over time. The branded apparel segment will observe an increase of 13.4 % CAGR over the following five years versus the 10 % CAGR projected for the entire apparel sector.
Classification of the apparel segment:
The apparel market in India is dominated by the western wear market which contributes to 69% in 2020 and it is anticipated to increase and contribute 72% by FY 2025. The increase in urbanization of areas and the rise in the number of working personnel have surged the apparel segment more inclined towards western wear. Between 2020-25, the western wear market in India is anticipated to increase at a CAGR of 10.9%. Among all the categories of western wear, T-shirts are considered to be the most wearable and comfortable clothing. Due to the comfortable fabric and diverse design fits, western wear is more preferable to the consumers.
Source: Luxe Digital
Another category in western wear that has the potential to grow more and more over time is denim. The Indian denim market is exhibiting constant growth over the years. Denim is highly fashionable and wearable.
The ethnic wear market is expected to increase at 7.8 % and reach approximately USD 30 billion in 2025 from USD 20.6 billion in 2020. As per Technopak, the total Indian ethnic wear market is valued at Rs 70,000 crore where women's ethnic wear has an 85% share in the market and is foreseen to grow at a CAGR of 10% till 2022.
How does the western-wear market dominate the fashion industry in India?
In 2018 the market size of women's western wear across India was nearly INR 235 billion and was estimated to reach INR 625 billion in 2023. Over the last couple of years, the western-wear market has developed in the Indian fashion market. Due to the entrance of various international brands like Zara, Forever 21, etc, the western market has grown and has the potential to rise.
Source: Maximize Market Research
With the rising population in India, which mostly comprises of the young generation aged between 15 to 29 years, nearly 26% is the consumer prefer western-wear in the country. Brand awareness and increasing disposable income are also major factors contributing to the growth rate of western wear in India. One of the biggest drivers of western wear in the country is the entry of international brands. With this, consumer taste has shifted towards new trends and styles in the fashion market.
Source: Maximize Market Research
Consumers have become more exposed to the global outlook of the fashion industry. Increased infiltration of the internet has emerged in the growth of e-commerce in India. Due to the efficiency of online shopping, adjustable return policies, and multiple payment methods, the youth of India purchase mainly western wear. The urbanization of rural areas at a rapid pace has also increased the consumer purchasing power as well as people in rural areas are aware of fashion trends. Their inclination towards western trends is another cause for the increasing demand for western wear.
How will the COVID-19 pandemic impact the fashion industry in India?
The COVID-19 pandemic had a significant influence on industry and consumer sentiment in India. The coronavirus induced lockdown has immensely impacted the sales of the fashion industry in the country due to the closure of shopping malls and retail markets. The consumer segment has turned their preference towards spending more on essentials. In the apparel sector, consumer demand is more likely to choose casual wear such as t-shirts, tops, casual shirts, and activewear. Consumers expect clothes that serve dual purposes of work from home and infrequent voyages to the office.
Source: Medium
The abrupt lockdown not only influenced the sales but also disrupted the supply chain of the fashion market. Furthermore, fashion brands are making innovative strategies to reach out to consumers during the pandemic. For instance, the digitalization of the retail market and the entry of artificial intelligence have driven the growth of the fashion market. The retail markets have developed various hygiene maintenance methods with the ease of lockdown over time.
The textile and apparel industry provides direct employment to more than 45 million people but the nationwide lockdown has driven to a provisional closure of companies resulting in low employment generation in the country.
Source: TT&F
The COVID-19 pandemic is essentially anticipated to skeptically influence exports and domestic sales. The export market being disrupted has resulted in excess inventory along with slower exportation of received products which in turn leads to higher working capital requirements.
Source: OptinMonster
Brand-new market openings have stood and domestic markets are facing an inventory build-up. Further, domestic prices could be negatively affected if exporters discharge their inventories in the domestic market leading to reduced margins.
Summary
As per a report in the India Business of Fashion states, India's apparel market is foreseen to increase at nearly 11% to reach USD 85 billion by 2021. It also stated- "The Indian apparel market, pegged at around USD 65 billion, is the second-largest retail market after food & grocery in India. It grew at a Compound Annual Growth Rate (CAGR) of 11.5% in the period from 2012-17 and is expected to grow at nearly 11% CAGR in the 2017-21 period to reach a value of USD 85 billion by 2021”. The Indian fashion industry is anticipated to attain US$ 400 million in a couple of years with a robust increase of above 10% year-on-year. The cause India's fashion industry will have a vivacious future is because of its large young population coupled with increasing disposable incomes, leading to an expansion in consumerism.