New Delhi [India], January 17 (ANI): India's apparel retail market is set for a significant expansion over the next five years, with industry size projected to touch nearly Rs 16 lakh crore by 2029-30, driven by rising disposable incomes, rapid digitalisation and strong growth in value fashion and e-commerce, according to a CareEdge Ratings report.

The apparel market, estimated at Rs 9.30 lakh crore in 2024-25, has grown at a compound annual growth rate (CAGR) of around 7 per cent since 2017-18.

Organised retail currently accounts for approximately 41 per cent of the total market and is expected to grow at a faster pace of 10-13%, supported by increasing consumer preference for branded apparel, the entry of international brands and the expansion of structured retail formats.

A key driver of growth is the value fashion segment, which is benefiting from rising brand awareness and consumer price sensitivity.

Value fashion, estimated at Rs 3.5 lakh crore in 2023-24, is expected to grow at a CAGR of 7 per cent to reach Rs 5.0 lakh crore by 2029-30.

Retailers such as Zudio, Max Fashion and Reliance's Yousta are aggressively expanding their store networks, particularly in Tier-2 and Tier-3 cities, which are emerging as major consumption hubs, it said.

E-commerce is another major growth engine for the sector.

Online channels currently account for about 22 per cent of organised apparel retail and are projected to increase their share to nearly 25 per cent by 2029-30, translating into a market size of around Rs 5.0 lakh crore.

Rising internet penetration, increasing adoption of smartphones and the influence of Gen-Z consumers on fashion trends are accelerating the shift towards digital-first and omnichannel retail strategies.

While the industry faced demand pressures in 2024-25 due to inflation and adverse weather conditions, signs of recovery emerged during the festive and wedding season towards the end of the year.

Increased footfalls, promotional online sales events and improved consumer sentiment have supported the rebound in sales momentum.

CareEdge Ratings noted that recent GST changes are likely to favour the value segment, with apparel priced below Rs 2,500 attracting a lower tax rate of 5 per cent, boosting affordability and volumes.

In contrast, higher GST on premium apparel may encourage consumers to trade down, further strengthening demand for value offerings, it said. (ANI)