Signaling a robust expansion, India's apparel sector is projected to grow at a CAGR of 11 per cent from FY24-29. This forecast aligns with the sector's historical performance, having expanded at an 11 per cent CAGR from FY20-24, mirroring India's nominal GDP and private final consumption expenditure (PFCE) growth, according to a new report by HSBC Global Investment Research.
The branded apparel sector expanded at a CAGR of 16 per cent from FY12-24. This growth was largely fueled by increasing market penetration and enhanced affordability. Looking ahead, non-formal wear is expected to lead growth within various apparel sub-segments.
Activewear is predicted to witness the highest growth at a 25 per cent CAGR from FY24-29, a trend stemming from the post-COVID-19 shift towards casual wear. Organized value retail is also poised for substantial growth with a 16 per cent CAGR (FY24-29), benefiting significantly from the ongoing transition away from the unorganized sector.
However, the apparel market remains highly competitive, facing disruptions from e-commerce, the entry of foreign brands, and rapidly changing fashion cycles, the report.
The report identifies two primary business models within the sector: Format-focused (retail outlets with distribution primarily limited to the company's own stores and e-commerce) and Brand-focused (an asset-light business model but working capital-intensive due to a diverse distribution mix). The format model has an advantage due to its broader customer base and better control over their supply chains, the report states. Additionally, formats are better suited to navigate the emerging risks in the apparel space, it adds.
Meanwhile, India’s Textile and Apparel (T&A) exports expanded by 7.4 per cent growth in April 2025 compared to the same month last year. This positive momentum was primarily driven by the strong performance of the apparel segment, which registered a robust 14.43 per cent Y-o-Y growth, according to an analysis of data released by the Ministry of Commerce.
In April 2025, Indian textile exports grew by 2.61 per cent from April 2024, while apparel exports increased by 14.43 per cent to $1.37 billion during the month as against $1.2 billion in April 2024.
