India's Rising Influence in Fashion: A Paradigm Shift

India is emerging as a crucial player for international fashion brands, driven by Asian growth markets and regulatory incentives. With strong middle-class expansion and digitization, India is poised to become a major global fashion market, despite current quality issues. The luxury segment is set for significant growth as well.

India is quickly becoming a focal point for high street fashion brands looking to shift their manufacturing base to Asian growth markets. According to a recent McKinsey & Company report, China's slowing economy, evolving consumer preferences, and the resurgence of international travel are pushing fashion brands toward countries like India. The report emphasizes Asia's potential as a top sourcing region for the next five years, underscoring regulatory incentives that boost manufacturing capabilities in these areas.

The report highlights India's rapidly growing mid-market segment, poised to expand by 12 to 17 percent by 2025, compared to the global market's modest single-digit growth forecast. Despite India recording the highest apparel quality failures in 2023, investments totaling USD 2.5 billion in production-linked incentives and quality control reforms and a tripling of foreign investment since 2019 promise improvements.

India's economic momentum, predicted to make it the world's fourth-largest economy by 2025, sets the stage for it to also become the third-largest consumer market by 2027, growing at a rate of 7% annually. A booming middle class, which is expected to reach 1 billion by 2050, and rapid digitization are driving the expansion of the non-luxury fashion sector. The rising trend-focused and young consumer demographic further accelerates this shift. The luxury market will also see growth as India's ultra-high-net-worth individuals are projected to expand by 50% from 2023 to 2028, marking it the fastest-growing segment globally.

(With inputs from agencies.)