India’s clothing sector is likely to continue its robust pace, with HSBC Global Investment Research forecasting a CAGR of 11% over FY2024–FY2029. The forecast is reflective of the industry’s performance in the last four years (FY20–24), when it expanded at a similar rate in sync with nominal GDP and private final consumption expenditure (PFCE).
The report points out a substantial change in consumers’ preferences and that branded clothing—supported by increased availability and affordability—has taken the lead with a 16% CAGR from FY 2012 to FY 2024, significantly higher compared to the 5% CAGR in the unbranded segment.
In the future, the fastest growth will be witnessed in non-formal wear segments, with activewear set to grow at 25% CAGR until FY ’29. This growth is fueled by post-pandemic dressing shifts toward casual and fitness dressing. Organised value retail will also grow extremely fast, at a 16% CAGR during the same span, as consumers shift away from unorganised retail seeking affordability and consistency.
In spite of the encouraging projections, the report highlights the highly competitive nature of the apparel industry—undermined by rapidly evolving fashion cycles, the rise of foreign brands and the growth of e-commerce.
HSBC identifies two pre-eminent business models that are moulding the industry: format-focused players, who have their own retail stores and e-commerce channels and
brand-focused players, who have an asset-light model but have greater working capital requirements due to their wider distribution mix.
The report indicates that format-led models have a strategic advantage, delivering tighter supply chain management and a more diversified base of customers—two drivers in managing the changing risks of the apparel sector.
All combined, these trends suggest a strong prognosis for both domestic consumption and international competitiveness in India’s apparel industry.
