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GROWTH OF APPAREL INDUSTRY IN INDIA:
PRESENT AND FUTURE ASPECTS


NAMRATA ANAND,
Assistant Professor,
MMIM, MM University,
Mullana, Ambala, Haryana- India
VANDANA KHETARPAL,
Associate Professor,
MMIM, MM University,
Mullana, Ambala, Haryana- India


ABSTRACT

Growth in Apparel Industry in India (AII) is increasing manifold with the change in lifestyle,
earnings and urbanization of the customers. The worldwide consumers are accepting the apparel
fashion products produced in India. AII has realized the immense potential to yield business in
this segment. The Indian consumers are adopting fashionable items quickly and conveniently
with the rise in competition. The present study has been conducted to derive the information on
the trends of AII through analyzing the present and future aspects. The study has been conducted
by analyzing the data collected from secondary source. The growth in AII with respect to global
scenario has been studied and highlighted in detail. The study also evaluates the potential of
growth of AII and the factors nurturing it.
Keywords: Fashion apparel, Retailing, Growth of Apparel Industry in India
Research Type: Descriptive





















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1. INTRODUCTION:
In addition to having faster population growth, India in recent decades has made remarkable socioeconomic
gains, which have resulted in changing societal perceptions of the Indian consumers. Therefore, Indians have
become a viable ethnic target market, after blacks and Hispanics, for marketers and retailers.
The fashion of anything keeps changing with time. Earlier in India, the kurta, lungi and saree were a trend
among Indians. All of these items were made of cotton. In the 1970s international fashion arrived in India with
the bold colors, flower prints and bell-bottoms. Synthetics turned trendy and the disco culture affected the
fashion scenario. It was a point, when the Indian fashion scenario reached a certain steady level and from there,
in the beginning of the 21
st
century, with the evolution of new designers, models and more sensible designing,
the fashion hype accelerated.
The Apparel Industry in India (AII) is one of the leading apparel industries in the world. Primarily it was quite
unorganized but the scenario has been changing with time. It was mainly started after the economic
liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the
Indian apparel industry, which has now successfully become one of the largest in the world.
India is one of the largest producers of fibre in the world. The main fibres produced in India include cotton, silk,
jute, wool, and man-made fibres. India is the third largest producer of cotton, the second largest producer of silk
and the fifth largest producer of man-made fibres. India has a strong domestic as well as international demand
which led to huge growth of the AII.
From the past few years fashion retailing sector is aligning with global trends with retailing firms such as
Shoppers Stop, and Crossroads entering into middle class segment. It is being predicted that the apparel sector
in India will grow at a very fast rate in the next few years. With the change in lifestyle, increase in per capita
income and urbanization of the Indian consumers, the attitude of spending money on fashion related articles
such as apparel is increasing a lot. Simultaneously the AII, accounting for the current demand and forecasting
for the future demand of Indian consumers, has also gone through significant changes in production as well as
availability of latest fashion designs and brands.
AII has made a major contribution to the economy of the country in terms of direct and indirect employment
generation and net foreign exchange earnings. The sector contributes about 14% to industrial production, 4% to the
gross domestic product (GDP) and 17% to the country's export earnings. It provides direct employment to over 35
million people. The textiles sector is the second largest provider of employment after agriculture. Thus, the growth
and all round development of this industry has a direct bearing on the improvement of the economy of the nation.

2. OBJECTIVE OF THE STUDY:
The objective of the present study was to study the trends of latest developments in the Apparel Industry in
India (AII) and to analyze the scope for future growth in the industry.

3. LITERATURE REVIEW:
The size of both domestic and exports houses of AII is projected to grow at a CAGR of 9.5% to reach $223
billion by 2021 from the $89 billion in 2011, according to a white paper by industry body FICCI and research
firm Technopak. India's share of the world's apparel exports stands at 4.5%. It is estimated that due to the
increasing shift of apparel and textile production to Asian nations and the deteriorating export-competitiveness
of China, this figure will grow to 8% by 2020, with a total exports value of $82 billion. This growth, from 4.5 to
8% of world trade, will open up huge potential for Indian players, the report said [1].
In 2007, the worldwide apparel market was worth 345 billion US $ and during the last decade the market grew
at an average of 8% per annum. Moreover according to NSS Report on Household Consumption of Various
Goods and Services in India, 2007 between 1993-94 and 2004-05, the proportion of households purchasing
readymade garments has increased in both rural and urban areas by about 75%, while the proportion purchasing
hosiery articles shows a three-fold increase. Apparel Export Promotion Council (AEPC) estimated that in value
terms, the size of the Indian textile market was Rs. 1692 billion in 2007 recording a growth of 8.8% [2].
India has the potential to become a rapidly growing market for better-quality apparel, particularly brand-name
fashion goods. The countrys sizable middle class of an estimated 200 million, which is expected to double in
the next 10 years, includes an estimated 40 million people who prefer brand-name fashions. India has the
potential to benefit significantly from ongoing global trade liberalization in apparel, particularly now that the
GOI has deregulated the apparel sector. A recent study of the Indian apparel and textile industry concluded that

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India has the potential to double its current world market share in apparel during the next 5 years, provided that
the apparel sector invests about $16.6 billion in new production technology [3].

4. RESEARCH METHODOLOGY:
The present study has been conducted utilizing the secondary data collected from various sources such as
published statistics, reports, journals, thesis, websites, etc. To understand the present developments and scope
for growth in future in the Apparel Industry in India (AII), descriptive and case study approach has been used to
reveal the facts.

5. APPAREL INDUSTRY IN INDIA: SCOPE AND CHALLENGES:
Apparel Industry in India (AII) poses an opportunity of tremendous economic growth. The emergence of
branded apparel outlets, shopping malls are also increasing rapidly all over India. The change in the lifestyle of
the Indian consumer, increasing working class, higher disposable incomes, dual career families, and many other
social and economic changes offer a wide array of opportunities, and contribute in accelerating the pace of
growth of AII. The major factors leading to a change in lifestyle are increasing per capita and household
income, rapid urbanization, education and media & information.
The apparel retailing in India consists of 95% of total sales in department stores; 70% in hypermarkets such as
Big Bazaar, Spencers Retail etc. The apparel fashion retail brands have been elevating the business and
economy in India rapidly. The mens wear segment portrays the highest scope of growth. Presently, the growth
rate is more for womens wear; growing at 12%, and is expected to gain majority share in future. Other apparel
segments such as kids wear are also increasing very rapidly [4].
The apparel industry is one of the extreme significant sectors of India in terms of revenue, investment, and trade and
job creation. Apparel industry has tremendous product variety, short product life cycles, explosive and changeable
demand, long and stiff distribution network. There is a transitional shift in the apparel industry with time [4].
Based on McKinsey report, the apparel is the most profitable segment of the Indian retail market. As shown in
Table 1 [5], food is the most organized segment, however it does not provide the desired profit. Apparel
retailing is not as organized and large as food, but offers the highest margin. There is further scope of
development of apparel retailing in India. Apparel consumers always prefer to have the latest style outfits,
trying to replicate themselves as the elite section of the modern society. Majority of them patronize the trends of
popular designer brands or those flaunted by Bollywood or sports celebrities.
A country of over one billion population, an enormous consumer class, India is measured as the most favored
destinations for trade and investments. Apparel and textiles are the largest segments in retailing industry. With
mounting income levels and changing attitude "look good - feel good", fashion is providing gigantic potential to
foray into the untapped Indian markets. Clothing is adopted by individuals to display their identity, and as an
important means to express them in society. Apparel has been the most profitable sector in terms of
development in India, not due to its volume but the way it has altered lifestyle of the consumers [4].

6. FACTORS NURTURING THE APPAREL INDUSTRY IN INDIA:
The AII is a rapidly growing segment; it is growing at a rate of 10% which is higher than that of retail
segments. It is having about 10% share in the overall retail segment in India and is the second largest retail
segment after food and groceries. It is also reported that the size of Indian domestic apparel industry will double
within five years due to several factors such as economic prosperity, simplified government policy, growth in
fashion orientation and brand awareness as well as consumer expectations. Moreover, the growth in AII in the
future has been estimated to be at very high which is due to various influential factors. Some of the factors are
discussed below:

6.1. Per Capita and Average Household Income:The per capita monthly income in India is growing with
time. It was Rs 5,130 in 2011-12 as compared to Rs 4,513 in 2010-11. The per capita private final
consumption expenditure in 2011-12 was estimated at Rs 42,065 as against Rs 36,677 in the year 2010-11,
showing an increase of 15%. In the previous year also this rate was similar.

6.2. Increasing Trends of Special Occasions: The trend of special occasions in India is also growing with
the increase in household income, urbanization of the people etc. The types of apparels and their

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availability for different special occasions are making the consumer preferential. Consumer is ready to
pay more to look trendy as per the theme of occasion. Not long ago, for example, men from Indias
northern regions only required a dark suit or sherwani, the traditional long coat, to cover big occasions
and important celebrations. From the past few years, men have started preferring Western stylist jackets,
and collared shirts, funky fashion, stripes or checks for business meetings. Today, Indians are more
inclined than consumers in other markets to buy apparel for a specific purpose [4].

6.3. Fashion Involvement: Increasingly, Indian consumers are embracing the idea of fashion. Traditional
clothing remains central to the way consumers dress, and the quality and craftsmanship of classic Indian
clothing have drawn rave reviews in recent years from some of the worlds leading designers, style
magazines, and fashion blogs. In a recent McKinsey survey of Indian consumers, 62% said they thought
it was important to keep up with trends. More than ever, Indian consumers are experimenting with
combining styles. The active involvement of the consumer has made-up the chance of growing the
industry in India.

6.4. Growth in the Womens Segment: With increasing income and rising number of working women, the
AII is witnessing rapid growth from past few years and this trend is expected to continue in future as well.
The Indian women apparel market is anticipated to grow at a CAGR of around 11% during 2013-2015.

6.5. Rapid Urbanization: India had the second highest urban population in the world in 2012 and will be
amongst the fastest growing urban populations globally between 2013 and 2020. About 29% of Indians
live in cities n towns, among the least urbanization ratio of any country in the world. However that has
been shifting fast in the forthcoming 20 years, anticipated number of Indians living in cities will grow by
300 million, where they will adopt new styles and fashions to cope with new lifestyles and social statute.

6.6. Globalization of Industry: The overall growth of the AII can be attributed to the globalization. About 35
million personnel are employed by the apparel and textile industry in India which accounts for 21% of the
total employment generated in the economy. The globalization of the AII also leads to introduce the modern
and efficient manufacturing machineries, and techniques. Moreover, the industry in developed countries like
USA and UK have their manufacturing facilities in developing countries like India and China or they
outsource the facilities of the latter countries due to the low manufacturing costs in developing countries. It
increases the scope for more employment.

6.7. Diffusion of Fashion Innovators: Diffusion is the spread of a fashion object within and across social
systems. It is highly dependent on the fashion innovators who help a lot in the fashion invention and
introduction of new styles. A source of fashion objects, such as a fashion designer, entrepreneur, or
consumer innovator creates an object that is noticeably different from its predecessors.

6.8. E-tailing of Apparel: With the boom in the organized retail industry and concept of online retailing (e-
tailing) is catching pace, expansion strategies adopted by companies will give a new direction to the AII.
The e-tailing of apparels in India is on radar for the majority of online consumers [6]. According to
PriceGrabber.coms Apparel Survey, 65% of the online consumers feel comfortable purchasing apparel
through e-tailing [7].

6.9. Organized Retail: The chain of large and branded stores showing the products stocked systematically
and displayed, will speed the transformation of consumer preferences. For now, organized retail accounts
for less than 20% of all Indian apparel purchases. However, the scores of shopping malls have opened on
the outskirts of Indias largest cities during last five years which has increased the trend of organized
retail of apparels in India. The concept of getting many things right at once: figuring out what consumers
want, developing a profitable retail concept, and building a solid team, is increasing which will surely
grow the AII.

7. GROWTH OF APPAREL INDUSTRY IN INDIA: PRESENT AND FUTURE ASPECTS:
India, with a population of more than 1.2 billion people, has a huge domestic market. Indias middle class is
half the countrys total population. Based on purchasing power parity, India is the fourth-largest economy in the

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world, has the third-largest GDP in the continent of Asia, and is the second-largest economy among emerging
nations. India is also one of the fastest growing economies of the world. Although the disposable income of the
majority of the Indian population is low, as the Indian economy grows, more consumers will have greater
discretionary income for clothing and other purchases after meeting their basic needs [3].
Change in consumers behavior towards shopping & lifestyle, increasing household income and urbanization of
the customers are supporting the growth of AII. The growing apparel industry is contributing to the GDP of
India. The export of the apparels in India is shown in Figure 1 which indicates that the export of apparels
increased continuously over the years [2].
According to the study carried out by Technopak, the growth in the apparel segment is primarily driven by the
growth in modern retail. An increasing number of international brands across formats shall foray into India to
leverage the potential. Keen competition is driving international brands to adopt made for India models leading
to higher acceptance and thus increased share from around 18% in 2011 to 25% over the next five years [8].
Demand for nonwoven textiles has been growing with increasing domestic affluence, growing health
consciousness to use more disposable clothes, and the cost effective production of synthetic fibres in India. The
liberalization of the Indian economy has created opportunities to import machinery and technology at
preferential tariffs and enter into joint venture arrangements with foreign firms. The technical textiles market in
India has grown due to strong demand for automotive fabrics [3].
Indias total apparel and textile industry size (Domestic and Exports) was estimated to be Rs. 4,18,000 Crore
(USD 89 billion) in 2011 and is projected to grow at a CAGR of 9.5% to reach Rs. 10,50,000 Crore (USD 223
billion) by 2021 (Figure 3). The current domestic apparel market is worth Rs. 2,73,350 Crore (USD 58 billion)
and is expected to grow at 9% annually to reach Rs. 6,63,800 Crore (USD 141 billion) by 2021. The domestic
AII is also expected to grow at a CAGR of 9%. Higher per capita consumption, favorable consumer
demographic and increase in prices will drive apparel market growth in India [8].
The apparel and textiles sector has witnessed a spurt in investment during the last five years. The industry
(including dyed and printed) attracted foreign direct investments (FDI) worth Rs 5,674.45 Crore (US$ 1.04
billion) during April 2000 to February 2013. The Government of India (GOI) has also promoted a number of
export promotion policies for this sector. It has also allowed 100% foreign direct investment (FDI) in the Indian
textile sector through automatic route [9].
According to the Technopak study, the buying behavior of the Indian consumer is changing with time (Table 2).
The buying behavior of the consumer 10 years is quite different to the present one and the latter is quite different
to the project buying behavior after 10 years. The choice of diversification of the mid-sized companies in India is
also increasing leading to the forward integration into the retail sector. After building successful brands within the
domestic territory, Indian apparel brands are venturing into international markets in order to enhance brand
salience. According to the study, the main areas of apparels for the development and growth are kidswear, denim,
contemporary ethnic wear for women, lingerie, lifestyle accessories and active & comfort wear [8].
The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as
export demand. For the apparel and textile industry, the proposed hike in FDI limit in multi-brand retail will
bring in more players, thereby providing more options to consumers. With consumerism and disposable income
on the rise, the retail sector has experienced a rapid growth in the past decade with several international players
like Marks & Spencer and Guess. The organised apparel segment is expected to grow at a compound annual
growth rate (CAGR) of more than 13% over a 10-year period [9].
According to the research carried out by Corporate Catalyst India, along with the increasing export figures in
the Indian Apparel sector in the country, Bangladesh is planning to set up two Special Economic Zones (SEZ)
for attracting Indian companies, and duty free trade between the two countries. The two SEZs are intended to
come up on 100-acre plots of land in Kishoreganj and Chattak, in Bangladesh. Secondly, Italian luxury major
Canali has entered into a 51:49 Joint Venture with Genesis Luxury Fashion, which currently has distribution
rights of Canali-branded products in India. The company will now sell Canali branded products in India
exclusively [10].These facts highlight the fast pace of growth expected in the Indian apparel sector and offers
tremendous growth opportunities for both domestic and global apparel players.

8. CONCLUSION:
The study describes in detail the facts about apparel fashion industry and its growth potential. In spite of the
apparel consumers increasing demand and their active role in the diffusion of innovation, the study highlights the
importance of research in the domain of apparel industry to tap this increasing potential. Apparel retailers and

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suppliers also have a decisive role to play in order to understand the consumer behavior for buying the fashion
apparel so that they may cater to this segment more profitably. They must take responsibility for the elements
under their domain that also affect the technical factors in addition to the condition of machinery, efficiencies in
the production line, and good management practices for growth of the apparel industry in India (AII).
The growth of the AII is also highlighted by the increase in the number of large fashion events. Industry growth
in India is mainly driven by the growing exposure of domestic designers at international forums, but growth is
also supported by other factors such as the launch of focused business education courses for emerging designers
and the establishment of an industry association. The role of e-tailing is also studied in this study. It is also an
emerging area where the retailers or brand owners need to penetrate in more depth and with focused marketing
strategies. This study also indicated the possible factors responsible for the growth of AII. Lacking in anyone of
them will negatively affect the growth of AII. It is very much important to consider all factors accountable for
the growth of AII and the factors which are more sensitive may be given more preference.

9. REFERENCES:
1. http://articles.economictimes.indiatimes.com/2012-10-10/news/34363404_1_apparel-exports-textile-and-
apparel-cent-of-world-trade Accessed on 1
th
November 2013.
2. https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=
1&cad=rja&ved=0CCgQFjAA&url=http%3A%2F%2Fwww.ihdindia.org%2FFormal-and-Informal-
Employment%2FPaper-5-Garment-Industry-in-India-Some-Reflections-on-Size-Distribution-of-
Firms.pdf&ei=Da-cUtmeMIyErAen5oDoAw&usg=AFQjCNGtvbQhHRrTl
zeRaRdfLtyrtfmmZA&bvm=bv.57155469,d.bmk Accessed on 1
th
November 2013.
3. Simpson. V. (2001), Indias Textile and Apparel Industry: Growth Potential and Trade and Investment
Opportunities, Publication 3401, United States International Trade Commission Washington, DC 20436.
4. Pani. A., Sharma. M. (2012), Emerging Trends in Fashion Marketing: A Case Study of Apparel
Retailing in India, International Journal of Business and Management Tomorrow, Vol. 2(10), pp. 1-8.
5. http://csi.mckinsey.com/Knowledge_by_region/Asia/India/~/media/Extranets/Consumer%20Shopper%20
Insights/Exhibit/exhibit_indiaapparel_2.ashx Accessed on 1
th
November 2013.
6. McCormick. H., Livett. C. (2012), Analyzing the influence of the presentation of fashion garments on
young consumers' online behaviour", Journal of Fashion Marketing and Management, Vol. 16(1), pp. 21-41.
7. www.priceGrabber.com Accessed on 1
th
November 2013.
8. Amit. G., Pakhie. S., Peush. N., Prakash. B., Ruby. J., Brahma.K.P. (2012). Textile & Apparel
Compendium 2012, www.technopak.com.
9. http://www.ibef.org/industry/textiles.aspx Accessed on 1
th
November 2013.
10. A brief report on textile industry in India. March, 2013, Corporate Catalyst Ltd.



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TABLE 1: MOST PROFITABLE SEGMENTS OF THE INDIAN RETAIL MARKET
Category
Typical retailer
margin
Description
Food 15-20% More than 80% organized retail in India is food, however, margin
are not as high
Apparel 35-50% Highest retailer margins through apparel
The more organized segments like mens formals provide the
highest returns
Electronics 5-10% Household appliances may provide as much as 8-10%, however,
categories like cell phones may be as low as 5-6%
Source:
http://csi.mckinsey.com/Knowledge_by_region/Asia/India/~/media/Extranets/Consumer%20Shopper%20Insigh
ts/Exhibit/exhibit_indiaapparel_2.ashx


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TABLE 2: TRENDS OF BUYING BEHAVIOR OF CONSUMER
FOR FASHION APPARELS WITH RESPECT TO TIME
10 Years Ago Current After 10 Years
Need-based Clothing
Shirts
Trousers
Jackets
Sarees
Salwar Kameez
Occasion Specific Dressing
Sports/ Gym wear
Occasion specific ethnic wear
Casual wear
Office wear
Night wear
Party wear
Work wear
Detail Oriented
Design-based assortment for
occasion wear
Fast fashion
Eco-friendly apparel
Technical garments like
temperature controlled/ IT-
embedded garments etc.
Key Purchase Parameters
Basic function
Comfort
Price
Look
Trend
Fashion
Exclusively
Technical function (smart)


FIGURE1. EXPORTS OF APPARELS IN INDIA IN MILLION US $
(SOURCE: COMPUTED FROM RBI HANDBOOK)


FIGURE2. PRESENCE OF INTERNATIONAL BRANDS IN THE MODERN APPAREL RETAIL [8]


FIGURE3. TRENDS AND PROJECTIONS OF SALES OF APPARELS
IN INDIA, BOTH DOMESTIC AND EXPORTS, IN RS CRORE [8]

----
-
2,000
4,000
6,000
8,000
10,000
12,000
1
8
8
7
-
8
8
1
9
8
8
-
8
9
1
9
8
9
-
9
0
1
9
9
0
-
9
1
1
9
9
1
-
9
2
1
9
9
2
-
9
3
1
9
9
3
-
9
4
1
9
9
4
-
9
5
1
9
9
5
-
9
6
1
9
9
6
-
9
7
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
2
0
0
5
-
0
6
2
0
0
6
-
0
7
2
0
0
7
-
0
8
82%
18%
2011
Domestic Brands
International Brands
75%
25%
2016
273
435
664
145
235
386
2011 (E) 2016 (P) 2021 (P)
Exports
Domestic