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The Indian fashion industry: A booming sector with huge potential

The Indian fashion industry may reach $115-125 billion by 2025. Are you ready to invest?

Indian fashion industry

Indian fashion is well known for its vibrant, sophisticated, and culturally rich traditions. From names like Manish Malhotra and Ritu Kumar to Satya Paul and Manish Arora, the list goes on when it comes to the big names in the fashion industry. 

But the industry is so much more than the designers and runways. The Indian fashion industry involves different aspects like textile research, garment manufacturing, pattern designing, modelling, and many others that make the sector what it is today.

The Indian fashion industry is predicted to expand at a compound annual growth rate (CAGR) of 11–12% to reach $115–125 billion by 2025, according to a survey. 

However, the sector is experiencing both possibilities and issues due to growing competition, altering customer preferences, and technological advancements.

In today’s article, we will dive into the history and evolution of the fashion industry in India and analyse the trends and challenges it has been facing. Let’s get started. 

Understanding the Indian fashion industry

Of all the capital goods that contribute to the Indian economy, the fashion sector is one of the biggest. The global apparel market’s size is now estimated to be approximately $1.9 trillion and may expand to over $2.6 trillion

According to estimates, the demand for clothing will increase globally at a five per cent compound annual growth rate (CAGR).

Indian fashion is renowned for its traditional and timeless ethnic and cultural elements. It is impossible to overlook how Indian fashion has evolved, reaching new heights on global stages even in the present day.

Below is an illustration of the fashion retail market size in India, with an estimation from ‘16 to ‘27 (in trillion ₹).  

YearMarket size (In ₹ trillion)

Prominent Indian cities such as Delhi and Mumbai have been the main drivers of this remarkable growth in the fashion sector. But there has been a notable change in recent years as Tier 2 cities have become fashion destinations. These cities have changed the face of the Indian fashion industry thanks to their rapid urbanisation and growing prosperity. 

For example, Zara became the first clothing brand in India to reach the USD 100 million sales milestone in less than five years in 2015. Urban customers are highly sought-after fashion companies and apparel retailers in India, and Zara capitalised on this by setting this bar.

Also read: Textile industry in India – The foundation of fashionable clothing trends

A brief history of the clothing industry in India

During the 16th and 17th centuries, India emerged as a global leader in the fashion industry thanks to its cotton fabric and creative patterns. 

India emerged as a significant force in the early modern clothing market, influencing trade from Africa to Europe and across the Atlantic. Cotton had a major role in India’s dominance in the early modern fashion industry. 

It was only with the country’s partition and economic stabilisation that the Indian fashion industry began to take off. Indo-Western fashion evolved as a result of an increase in interstate commerce. 

In the COVID years of 2020 and 2021, there was a drop in the fashion industry market growth of about 25 to 30%. However, online purchases have increased significantly throughout these years.

But in 2022, there was a rebound as customers returned to physical markets and businesses; growth in 2022–2023 is projected to have been between 15 and 20%. 

In 2023, the apparel market in India is expected to generate US$101.40 billion in sales. In 2024, there is again a projected 3.9% increase in volume. 

According to Forbes, the market for fashion retail in India will generate US$115 billion by 2026. As a result, India has the potential to become the heart of the fashion industry, hosting several fashion shows annually. 

One of the most exciting periods for the Indian fashion business is now, thanks to emerging trends like eco-friendly apparel, customised designs, 3D-printed clothing, and the adoption of AI. 

While there is no denying that the future of the fashion industry is promising, it is also true that the sector has been facing some challenges that need to be addressed.

With more local and foreign companies entering the industry, the Indian fashion sector is growing increasingly saturated and competitive. Consumers now have more options than ever because of e-commerce and globalisation, which makes it more difficult for companies to stand out.

On top of that, the Indian fashion sector has a skills shortage in the workforce despite its potential for expansion. The professional expertise and hands-on abilities needed to make it in the demanding fashion industry often need to be improved among recent graduates.

Also read: India’s cosmetic industry analysis

The future outlook of the Indian fashion market 

The industry’s reaction to environmental and social concerns, together with the changing demands and preferences of customers, can be seen in the upcoming trends. 

Eco-friendliness and ethical fashion

Sustainable and environmentally friendly apparel will see an increase in demand. The effects that the clothing business has on society and the environment have led consumers to become more concerned. 

This will cause people to look for clothing that is manufactured ethically and sustainably using eco-friendly materials like recycled fabrics, organic cotton, and other advanced alternatives.  

Growing D2C brands

Over the last ten years, the clothing industry has seen an interesting development in the rise of Direct-to-Consumer (D2C) businesses. D2C companies offer their goods to customers directly, cutting out intermediaries, including wholesalers, distributors, and retailers.

The impact of social media

Social media has greatly influenced fashion sensibilities and men’s and women’s clothing choices, particularly in India’s Tier 2 and Tier 3 cities. Through social media platforms, people in tier 2 and 3 cities can now simply access a variety of fashion accessories and apparel from influencers and bloggers. 

The urge to try out new looks has grown as a result of this exposure, which will undoubtedly have an effect on the fashion industry as a whole in the years to come.

Regional brands going national

Regional companies are starting to realise how valuable it is to expand nationally with careful planning, a thorough grasp of the target market, and a dedication to providing high-quality goods and experiences. This will change the course of the fashion industry in the future as well.

Also read: From print to digital: The story of India’s media and entertainment sector

Stocks to look out for in the apparel industry

If you are looking for the top stocks in the textile industry, you can find them here.

Here are 5 more companies to look out for on BSE. (Ranked by market capitalisation as of December 13, 2023)

CompanyMarket capitalisation (₹ cr)Last price (₹)
PDS 7,429.43562.60
Garware Technic6,910.143,358.00
Jindal Worldwide6,477.81324.75
Indo Count297.755,868.35


Though there may be setbacks along the way, the fashion industry has a promising future to look forward to. In the next few years, emerging economies like India will likely drive growth in the global clothing business. There is a greater need for clothing as a result of its sizable and increasing middle class. 

One example is India’s e-commerce sector, which is mostly used by middle-class people and is expected to reach $99 billion by 2024 at a CAGR of 20%. Indian fashion labels have a great chance to take advantage of this.

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