India’s apparel industry has leveraged a rising domestic market to post substantial growth rates over the past decade, shows a CARE Ratings report released this week. From just around Rs 1.924 lakh crore in the financial year 2009-10 (FY10), the domestic apparel industry has grown to a whopping Rs 5.408 lakh crore in FY18, data compiled by CARE shows, recording a compound annual growth rate (CAGR) of 13.8 per cent. In contrast, Indian firms’ export business in the segment grew much slower at 9.8 per cent during the same period.
The reason for this boom, the agency says, is due to a confluence of several macro-economic factors. First, rising disposable income has led to a growing consumer class that is not leery of spending money on clothes, especially in urban markets.
While the need-based purchase habits of India’s rural have not been remunerative for branded apparels, rising urbanisation and retail penetration is giving these firms a boost. The Indian market is also seeing an increase in the share of designer wear in the overall market.
As for price segments, the medium segment comprises the majority, but demand for different categories vary across geographies. “ The urban metro market... is the biggest market for apparel in India and contributes over 20 per cent to the Indian apparel market. Considering that less than 20 per cent of India’s population lives in these cities indicate the higher purchasing power in urban areas,” CARE’s Saurabh Bhalerao, Associate Director, and Madan Sabnavis, chief economist, write.
But, with metros becoming steadily more expensive to operate in and high saturation, business is moving to smaller towns. “The increasing purchasing capacity and awareness of fashion and trend in small cities has also resulted in providing a huge market to the organised players,” they said.