The Indian fashion and apparel industry is expected to rebound in FY ’26 after a slow start in FY ’25 that was characterised by muted demand and negative same-store sales growth (SSSG), according to India Ratings and Research (Ind-Ra).
Increasing discretionary incomes, more wedding days, and favourable monsoons are the main drivers of this optimism. These factors are anticipated to boost demand, especially in Tier-2 and Tier-3 markets.
In a recent report by Ind-Ra, segments like fast fashion, ethnic wear, and luxury are set to outperform. Fast fashion, in particular, is witnessing explosive growth, fueled by social media influence and Gen-Z’s appetite for trendy, quick-turnaround clothing. Moreover, major retailers are doubling their store counts in this category, with similar growth projected for FY ’26.
Additionally, ethnic clothing and luxury are becoming more popular due to the growing wealth and ambition of middle- and upper-class consumers. Even though physical retail is still important for its experiential value, especially for high-end purchases, the e-commerce sector is predicted to develop faster than brick-and-mortar businesses due to internet adoption.
With an emphasis on cost reduction and shop productivity, retailers are expanding cautiously but strategically. EBITDA margins, according to Ind-Ra, stayed steady at 16.5 per cent in FY ’25 and increased in FY ’26 as businesses increased productivity.
With areas like fast fashion and luxury categories generating momentum and predicted revenue growth of 10.5 per cent in FY ’26, the Indian fashion industry is poised for a transformative period that balances innovation, scalability, and customer desires.
