The Indian fashion and apparel industry is set for significant growth in FY ’26, driven by key segments such as fast fashion, ethnic wear, and premium categories, according to a report by India Ratings and Research (Ind-Ra). After a sluggish FY ’25, characterized by muted demand and negative same-store sales growth (SSSG), the industry is expected to rebound, fueled by increasing discretionary incomes, more wedding days, and favorable monsoons. This optimism is particularly strong in Tier-2 and Tier-3 markets.
Fast fashion is projected to experience explosive growth, driven by the influence of social media and the preferences of Gen-Z consumers for trendy, quick-turnaround clothing. Retailers are capitalizing on this trend by increasing their store counts, with significant expansion expected in the fast fashion category. Meanwhile, ethnic wear and luxury segments are also gaining traction, as middle- and upper-class consumers demonstrate growing demand for premium and traditional clothing.
Although physical retail remains important, especially for luxury purchases due to its experiential value, the e-commerce sector is expected to outpace brick-and-mortar stores as internet adoption increases. Retailers are expanding cautiously, focusing on cost reduction and store productivity, with EBITDA margins expected to improve from 16.5% in FY ’25 to higher levels in FY ’26.
Overall, with a projected revenue growth of 10.5% in FY ’26, the Indian fashion and apparel industry is poised for a transformative period, balancing innovation, scalability, and evolving customer preferences.
