How can fashion start-ups flourish in India? Here’s what experts have to say!

India’s fashion industry is experiencing a remarkable boom, with fashion start-ups emerging as significant players alongside the major industry leaders. According to the Department for Promotion of Industry and Internal Trade (DPIIT), India recognised over 80,000 start-ups in 2022, with 14,000 new start-ups recognised in the fiscal year alone out of which 15 per cent belong to the fashion industry.

As a result, India has now become the world’s third-largest start-up ecosystem, following the US and China. This growth is fuelled by India’s expanding middle-class, projected to reach 583 million people by 2025, accounting for 41 per cent of the population. Factors such as increasing disposable incomes, urbanisation, the popularity of e-commerce and a focus on sustainability are driving the Indian fashion market, estimated to reach US $ 135 billion by 2025. With these favourable conditions, the present and future outlook for fashion start-ups in India looks promising.

Kirti Poonia, Co-founder of Relove, a technology provider enabling brands to launch resale (thrift) shops on their websites, expresses hope in India’s potential as a strong leader. Poonia states that India has always been a manufacturing hub, but the rise of the direct-to-consumer (D2C) trend has allowed individuals to create products in India and sell them directly to consumers.

“The entry barrier is low, enabling anyone with design skills and a few tailors to launch a brand with minimal investments. I see a new trend where Indian brands specifically target the US market, adopting an international approach in design, models and branding while producing in India and shipping worldwide. Although the market is crowded, only a select few are expected to succeed,” commented Poonia.

What does it take to build a successful fashion start-up?

In today’s age of technology and social media, start-ups have the opportunity to showcase their products and create brand awareness on a global scale. However, launching a fashion business in India is no easy task. It requires careful consideration at every stage, from idea generation to execution.

According to industry experts, there are specific steps entrepreneurs must take to establish foundation for a successful fashion start-up in India. The first crucial step is to thoroughly analyse the market conditions, including current trends, competition and potential challenges. With a clear understanding of the market, entrepreneurs can make informed decisions and identify opportunities to differentiate themselves.

Once armed with market insights, it is essential to craft a unique selling proposition (USP) and position the brand in a way that resonates with customer demands. By bridging the gap between consumer desires and available products, start-ups can carve out a distinctive space for themselves and attract a loyal customer base.

Ramesh Bafna, a known investor with extensive experience in supporting start-ups, emphasises on the significance of the product itself. “What sets it apart from existing products? Is it niche, innovative or distinct in terms of materials used? These are crucial questions to consider,” told Bafna to Team AR, who is a seasoned professional and has held prominent positions at Zilingo, Myntra, Flipkart and Wipro. With his extensive experience, Ramesh has not only supported start-ups across different industries but is currently involved in assisting two apparel-based start-ups specialising in organic and premium performance wear, respectively.

Strategies for long-term success and ensuring adherence

Fashion start-ups employ various strategies to secure their position in the market. These include expanding the product range, establishing physical stores for a tangible shopping experience, entering new markets for geographic diversification, collaborating with other brands for expertise and reach and going public for increased capital and exposure.

To achieve long-term success, start-ups must meticulously plan their operations and management roles. This involves examining the entire supply chain, building a strong brand for credibility and customer loyalty, prioritising constant innovation and embracing market feedback for adaptability and growth.

Anuj Batra, a reputed retail consultant currently advising 180 start-ups, emphasises the significance of building a robust brand identity that effectively connects with the target audience.

“Start-ups should prioritise creating a distinctive and appealing brand that effectively connects with their target audience. Whether it’s a business model or product positioning, everything should be considered around customer expectations. Following the latest trends is crucial as it helps attract customers, and presenting the brand through engaging customer interactions can significantly boost its success. It is supremely important to follow the pattern where the market is heading,” mentioned Anuj while talking to our team.

However, all that glitters is not and the same fits true for start-ups! There are numerous challenges the entire start-up ecosystem faces. Shehlina Soomro, Founder, Saritoria – a leading South Asian-funded luxury fashion resale platform – highlights the challenges of sustaining a start-up in the fashion industry, requiring immense hard work, competitiveness and perseverance. “Overcoming these challenges and establishing leadership in the industry involves implementing the right strategies and tactics while understanding that there is no one-size-fits-all approach,” suggested Shehlina who has first-hand experience with Saritoria’s remarkable success in overcoming market challenges in the past two years.

Investor’s outlook

Investors in India’s fashion industry seek start-ups with a clear vision, a strong management team and a unique value proposition. They prioritise companies with a solid business plan, a deep understanding of the market and a scalable model for long-term growth and profitability.

Yash Kela, Founder at Arrivae and Singularity Holdings VC, emphasises that key factors for a start-up’s success include its overall valuation, the entrepreneurs’ control over merchandise and inventory and the return percentage in e-commerce.

“In my opinion, these aspects collectively contribute to the strength of a start-up. With three apparel companies in my portfolio, I do understand the trajectory and I am very confident about the potential the start-ups in the apparel sector have,” mentioned Yash.

According to Neeraj Goenka, Director, Texport Industries and Member, Indian Angel Network, “For me, profitability is the key point, as without profitability, there would be fewer chances of further funding. Whatever might be the product or business model or the overall current business scenario, if I find any start-up to be profitable or that it has all the reasons to be profitable soon, I will happily invest in that start-up and guide too.”

Interestingly, when it comes to apparel manufacturing start-ups, there is no significant investment happening. India’s apparel manufacturing industry amounts to approximately US $ 48 billion (including both domestic and exports) but prominent manufacturing start-ups in the country often don’t get the required funding to scale up their project.

However, things are seen in a different perspective by K M Subramanian, KM Knitwear and President, Tirupur Exporters’ Association (TEA) who has invested in Tirupur-based activewear company. As India is rigorously making efforts to increase its market share in MMF-based apparel to fetch greater revenues, Subramanian shared his two cents on the matter.

“In my opinion, diversification and innovation are crucial considerations when investing in apparel manufacturing-specific start-ups or growing companies. While India currently excels in cotton-based products, the future lies in MMF (Man-Made Fibres). Though the market conditions are not favourable for investing in apparel manufacturing-based start-ups, I stand by my decision and will suggest the industry that, going forward, there is a great potential in this sector for investors and I personally believe activewear is one domain that can quadruple its growth,” averred Subramanian.

To put things into perspective, building a successful fashion start-up in India requires careful market analysis, a unique selling proposition, strategic planning, strong brand identity, constant innovation, adaptability and community involvement. With the right approach and favourable conditions in India’s fashion market, start-ups have the potential to thrive and become leaders in the industry – with the help of investors.