India's apparel retail market to reach 176 billion dollars by FY30

India’s apparel retail sector is poised for a massive transformation, with the market expected to reach 16 lakh crore (176 billion dollars) by FY30, according to a report by CareEdge Ratings. Driven by the rapid rise of e-commerce, a burgeoning "value fashion" segment, and deep penetration into Tier-2 and Tier-3 cities, the industry is transitioning toward a more organized, digital-first future.

Market dynamics and segmental shift

The total apparel industry is currently valued at approximately 9.30 lakh crore (FY25 estimate), having grown at a compound annual growth rate (CAGR) of 7 percent since FY18. The unorganised sector still dominates 59 percent of the market. However, organised retail, which holds a 41 percent share, is projected to grow by 10-13 percent.

Within the organised sector, e-commerce already accounts for 22 percent (5 lakh crore projected by FY30). This growth is largely fueled by internet penetration and the influential fashion preferences of Gen-Z. The top seven companies in the sector currently contribute 16 percent of the total organised market.

The value fashion segment, estimated at 3.5 lakh crore in FY24, is expected to reach 5 lakh crore by FY30. Brands like Zudio, Max Fashions, Reliance’s Yousta, and StyleUp are leading this charge by offering trendy, high-quality apparel at competitive prices, effectively challenging local unorganised boutiques. Smaller cities are emerging as major growth engines. Approximately 23 percent of total apparel demand is expected to originate from these regions, where rising disposable incomes and digital adoption are reshaping consumer behavior.

Quarterly performance and recovery

The market faced headwinds in Q2FY25 due to inflationary pressures and extreme weather. However, a recovery began in late 2024. Increased footfalls during wedding and festive seasons from October/November 2024 sparked a sales revival. Quarterly revenue for the top seven retailers showed consistent year-on-year growth, with Q3FY25 seeing a 14.5 percent increase to 13,886 crores.

Industry analysts maintain a favorable long-term view. Sonal Bhageria, associate director at CareEdge Ratings, notes that while brick-and-mortar stores will continue to dominate premium, experience-based purchases, e-commerce and value fashion in smaller cities will be the primary volume drivers moving forward.

Pulkit Agarwal, director at CareEdge Ratings, adds that "balancing expansion with omnichannel capabilities and cost-optimisation" will be essential for retailers to maintain stable credit profiles in this evolving landscape.