New Delhi: India is poised to become a significant focus for high street fashion brands, as these entities are increasingly looking towards Asian growth markets, particularly India, for manufacturing, according to McKinsey & Company in its latest report.
The global consultancy firm notes in the report that the economic slowdown in China, evolving consumer preferences, and the resurgence of international travel are presenting significant challenges to growth in the country. Consequently, international fashion brands are exploring alternative Asian markets for expansion.
Furthermore, the firm highlights that Asia is ranked as the top sourcing destination for global fashion executives over the next five years. This preference is driven by regulatory incentives that support the development of manufacturing capabilities in these countries.
"India is anticipated to assume a more prominent role," the firm states, emphasizing the country's potential to significantly contribute to the global apparel market.
The report further elaborates that India's robust economic growth is positioning it as a key player in the global fashion sector, especially in the mid-market segment, which is projected to experience a growth rate of approximately 12 to 17 percent in 2025, in contrast to the anticipated low single-digit growth of the global fashion market.
Additionally, the report acknowledges that India faced challenges in terms of apparel quality in 2023, but it suggests that these issues may be mitigated in the future.
"The Indian government has allocated approximately USD 2.5 billion for production-linked incentives and reforms aimed at enhancing quality control measures. Moreover, foreign direct investment has seen a threefold increase since 2019," the report notes.
Highlighting the potential, the report points out that India's economy, projected to become the fourth-largest in 2025, growing at an annual rate of 7 percent, positions it as the world's third-largest consumer market by 2027.
Moreover, the report suggests that the expansion of the non-luxury segment will be propelled by the growth of the middle class and advancements in digital technology.
"There are currently 430 million individuals in India's middle class, surpassing the middle classes of the US and Western Europe combined. It is expected to reach 1 billion by 2050, predominantly from tier-two and -three cities," the report states.
The report also underscores the potential in the luxury segment, noting that India's population of ultra-high-net-worth individuals (UHNWI) is set to grow by 50 percent from 2023 to 2028, making it the world's fastest-growing UHNWI population.
"Aspirational consumers, constituting approximately half of global luxury sales, are anticipated to increase from 60 million in 2023 to 100 million by 2027," the report adds.
The report also identifies potential in other prominent markets, including Japan and emerging Asian markets.
