The Indian fashion retail landscape of 2026 bears little resemblance to its nascent form at the turn of the millennium. Over the past 25 years, the sector has undergone a profound metamorphosis, evolving from a fragmented, highly localized, and predominantly unorganized market into a dynamic, technology-infused powerhouse.
In 2001, organized retail was a fringe concept, accounting for less than 4% of the market, with modern shopping experiences confined to a handful of department stores and a trio of malls across the entire nation. Today, the Indian fashion retail market, which encompasses both apparel and accessories, is demonstrating robust growth and an increasing significance within the nation’s broader economic landscape.
The Knowledge Company’s estimates state that In the fiscal year 2024, the market was valued at approximately $70.29 billion (₹6,18,525 crore). It is projected to expand by a strong 11% to reach approximately $78.02 billion (₹6,86,562 crore) in fiscal year 2025.
This dynamism is also reflected in its growing contribution to the overall retail sector, with its market share anticipated to increase from 7.3% in FY 2024 to 7.4% in FY 2025.
This report charts this remarkable quarter-century journey, arguing that India’s ascent from a global sourcing hub to a primary consumption market has been propelled by the powerful confluence of four critical forces: transformative
Policy, disruptive Technology, an aspirational Consumer, and consolidating Capital.
By 2026, the Indian fashion retail market is projected to reach an estimated value of USD 75-80 billion, extrapolating from a 2024 valuation of USD 70.29 billion and a robust compound annual growth rate (CAGR) of 12.87%.
This expansion is not monolithic; rather, it reflects the complexity of “Many Indias”. The market is characterized by the concurrent and rapid growth of distinct segments: a burgeoning mass-market driven by value-conscious consumers, a swelling mid-range catering to the aspirational middle class, and a fast-maturing premium and luxury sector fueled by rising affluence.
Each segment exhibits unique consumer behaviors, is served by different retail formats, and is charting its own distinct growth path, creating a multifaceted and highly competitive ecosystem.
A quantitative examination of the Indian fashion market reveals a story of exponential growth, structural formalization, and digital acceleration over the last 25 years.
The market’s value has expanded dramatically, moving through distinct phases of development.
For consistency, this report adopts the USD 60.29 billion valuation as the baseline for the fashion retail market in 2024.
The market’s composition is diverse, with clear leaders and high-growth segments.
The future trajectory of the market points towards continued high growth, with digital channels serving as the primary accelerator.
Year | Total Market Value (USD Bn) | Organized Retail Share (%) | Online Retail Share (%) | Key Growth Drivers for the Period |
2001 | <10 | <4% | Negligible | Nascent organized retail; Dominated by unorganized sector |
2006 | ~15-20 | ~5% | <1% | FDI in single-brand retail permitted; Early mall culture |
2012 | ~30-35 | ~8% | ~2-3% | Entry of global fast fashion (Zara); Rise of e-commerce platforms |
2018 | ~45 | ~35% | ~10-12% | GST implementation; Smartphone penetration; E-commerce consolidation |
2024 | 60.12 | ~42% | ~40% (Online + D2C) | Post-pandemic digital acceleration; Influx of global brands |
2026 (Est.) | ~77 | ~45% | ~45% | GST 2.0 reforms, Omnichannel integration; Growth in Tier-2/3 cities |
2030 (Proj.) | ~125-150 | >50% | >50% | AI-driven personalization; Rise of value and D2C brands |
The 25-year transformation of Indian fashion retail can be understood as a progression through four distinct eras, each shaped by pivotal policy decisions, technological breakthroughs, and shifts in consumer behavior.
Several factors in the late 90s set the stage for change. India’s economic liberalisation (which began in 1991) had started to increase consumer purchasing power and invite new business models.
This period also saw the precursor wave of international brands entering India through franchise or joint-venture routes – brands such as Benetton, Levi Strauss, Nike, Adidas and Reebok set up initial outlets in the 1990. Still, their footprint was tiny relative to the vast unorganised market.
The new millennium began with an Indian retail landscape almost entirely composed of unorganized, family-run establishments. These small “mom-and-pop” stores constituted over 96% of the market, defining the consumer experience.
The concept of organized retail was still in its infancy, pioneered by the first wave of department stores like Shoppers Stop and Pantaloons that had emerged in the late 1990s. The physical manifestation of this new retail format—the shopping mall—was a rarity.
In 1999, Ansal’s Plaza in Delhi became the country’s first mall, followed by Crossroads in Mumbai and Spencer Plaza in Chennai.
By the end of 2002, these three structures represented the entirety of India’s mall culture. The policy environment was equally restrictive.
Foreign Direct Investment (FDI) was prohibited in direct consumer-facing retail, permitted only in cash-and-carry wholesale operations since 1997.
It was not until 2006 that 100% FDI under the automatic route was allowed even for this B2B format. This era was foundational not for its market size, but for establishing the very idea of modern retail in the Indian psyche.
These early department stores and malls served as crucial proofs-of-concept, introducing a segment of urban consumers to air-conditioned, multi-brand shopping environments and signaling a latent market opportunity for future investors.
This period was characterized by two parallel and powerful disruptions: the birth of fashion e-commerce and the arrival of global fast fashion.
The digital seed was planted with the founding of Myntra in 2007, initially a personalized gifting site that would pivot to fashion, followed by the launch of marketplaces like Snapdeal in 2010 and Jabong in 2012. These platforms embarked on the arduous task of building consumer trust in online payments and last-mile delivery.
Simultaneously, a pivotal policy shift in 2006, which permitted 51% FDI in single-brand retail, opened the floodgates for international brands eager to control their identity and operations in India.
This policy directly enabled the most transformative event of the era: the entry of Zara in 2010. Launching through a strategic joint venture with Tata’s Trent, Zara introduced the fast-fashion model to India, fundamentally resetting consumer expectations around trend cycles, product newness, and the price-to-fashion equation.
The government further liberalized policy in 2012 by announcing 51% FDI in multi-brand retail, though its stringent conditions limited immediate impact. This era was thus defined by a dual disruption.
Offline, Zara established a new benchmark for speed, style, and in-store experience, compelling domestic brands to innovate. Online, nascent marketplaces began democratizing fashion access beyond the metros, laying the groundwork for the massive digital shift that would follow.
The third era was defined by the rise of domestic retail giants and a sweeping tax reform that accelerated the formalization of the industry.
This period saw the strategic consolidation of the market under large corporate umbrellas. In 2015, the Aditya Birla Group merged its apparel businesses to create Aditya Birla Fashion and Retail Ltd (ABFRL), a powerhouse of owned and licensed brands.
Reliance Retail intensified its expansion, launching its own fashion e-commerce platform, Ajio, in 2016 to compete directly with established players.
The digital landscape also matured and consolidated. The landmark event was Flipkart’s acquisition of Myntra in 2014 for approximately USD 341 million, a move that created an undisputed leader in online fashion and signaled the high stakes of the e-commerce battle.
The most significant policy event of this era was the nationwide implementation of the Goods and Services Tax (GST) in 2017-2018.
This historic reform replaced a labyrinthine structure of state-level VAT and myriad other taxes with a unified national system. While intended to simplify business, the transition was fraught with challenges.
The textile sector, in particular, was hit hard by an “inverted duty structure,” where taxes on raw materials were higher than on finished goods, leading to blocked working capital and operational stress for many manufacturers.
This period marked the great formalization of Indian retail. The unified input tax credit system of GST inherently incentivized businesses to operate within the formal, taxed economy.
Concurrently, the immense capital and operational scale of conglomerates like Reliance and ABFRL enabled them to navigate the complexities of the new tax regime and absorb competitive pressures far more effectively than smaller, unorganized players, thereby accelerating market consolidation.
The COVID-19 pandemic acted as a powerful, albeit disruptive, catalyst, permanently reshaping the retail landscape.
Nationwide lockdowns and safety concerns forced a massive and rapid migration of consumers to online channels, accelerating digital adoption by several years. Consumer demand pivoted towards comfort-centric categories like athleisure and loungewear, reflecting new work-from-home realities.
While the crisis severely disrupted supply chains and disproportionately impacted the unorganized sector, it also spurred innovation. The post-pandemic era has witnessed an explosion of Direct-to-Consumer (D2C) brands, which have leveraged social media and agile supply chains to connect directly with their audience.
Paradoxically, despite global economic headwinds, this period has also seen an international brand “gold rush” into India.
The number of global brands entering the market nearly doubled in 2024 compared to pre-pandemic years, with major players like ASOS, Foot Locker, Bershka, and Lululemon launching or expanding operations, signaling immense confidence in India’s long-term consumption story.
The most crucial lesson from this era was the validation of the omnichannel, or “phygital,” model.
The pandemic made it unequivocally clear that a seamless integration of online and offline channels—from AI-driven recommendations and virtual try-ons to click-and-collect and ship-from-store capabilities—is no longer a competitive advantage but a fundamental requirement for survival and growth.
Year | Policy & Regulation | Technology & E-commerce | Key Brand Entries & M&A | Consumer & Market Trends |
2006 | 51% FDI in single-brand retail permitted. | – | – | Early mall culture begins to spread in metros. |
2007 | – | Myntra founded. | – | Nascent awareness of online shopping. |
2010 | – | Snapdeal launched. | Zara enters India via JV with Trent. | Fast fashion concept introduced; changes trend cycles. |
2012 | 51% FDI in multi-brand retail announced. | Jabong founded. | Aditya Birla Group acquires Pantaloons. | E-commerce gains initial traction in fashion. |
2014 | – | – | Flipkart acquires Myntra. | Mobile-first e-commerce starts to dominate. |
2016 | – | Ajio launched by Reliance Retail. | ABFRL acquires Forever 21 India rights. | Rise of domestic retail conglomerates. |
2018 | Transition from VAT to GST regime completed. | AI & ML for personalization become mainstream. | – | Formalization of retail accelerates. |
2020 | – | COVID-19 pandemic drives massive digital adoption. | Flipkart invests in ABFRL. | Shift to comfort wear; safety becomes a priority. |
2024 | – | Quick commerce experiments in fashion begin. | ASOS, Foot Locker, Bershka enter India. | “Gold rush” of international brands into India. |
2025 | GST council rationalizes tax slabs for textiles. | AR try-ons and live commerce gain traction. | Lululemon announces India launch for 2026. | Omnichannel experience becomes standard expectation. |
The transformation of Indian fashion retail was not a linear progression but the result of a dynamic interplay between four core forces: policy shifts that opened the market, technological innovations that redefined it, a consumer evolution that fueled it, and corporate strategies that consolidated it.
Government policy has acted as both a gatekeeper and a catalyst for the industry.
The true game-changer was the 2006 decision to permit 51% FDI in single-brand retail, a policy that was later relaxed to allow 100% ownership.
This specific rule was critical because it attracted global brands that placed a premium on controlling their brand narrative, store experience, and operational standards—players like Zara, H&M, and later, Uniqlo.
This influx of foreign capital and expertise created a more competitive domestic market, compelling Indian brands to elevate their product design, supply chain efficiency, and retail experiences to match global standards.
The promise was immense: a single national market, the elimination of cascading taxes, and a seamless flow of input tax credit (ITC) that would boost efficiency and formalize the economy.
However, the initial implementation created severe headwinds for the fashion industry’s backbone—the textile sector.
The core issue was an “inverted duty structure,” where key inputs like man-made fibers (MMF) and yarns were taxed at higher rates (12% or 18%) than the final outputs like fabrics and apparel (taxed at 5%).
This anomaly meant that manufacturers paid more in taxes on their inputs than they collected on their sales, leading to an accumulation of tax credits that were difficult and slow to get refunded. This choked working capital, disrupted supply chains, and disproportionately harmed smaller, less capitalized businesses.
The new structure simplified rates into two primary slabs of 5% and 18% and, crucially, lowered the GST on fabrics and man-made yarn to 5%, resolving the long-standing inverted duty issue for MMF manufacturers.
However, the reform had a mixed impact. While it provided relief to the textile supply chain, it simultaneously raised the GST on apparel priced above Rs. 2,500 from 12% to the new standard rate of 18%.
This move, while simplifying the tax code, placed a higher tax burden on the premium and bridge-to-luxury apparel segments, potentially impacting affordability and demand.
The evolution of these policies reveals a deeper trend. The combination of increased competition from FDI and the initial compliance and capital burdens of GST created a challenging environment for small, unorganized players.
They lacked the financial muscle to compete with global giants and the operational sophistication to navigate the complexities of the new tax regime.
This dual pressure inadvertently created a fertile ground for consolidation, allowing large, well-capitalized domestic conglomerates like Reliance and ABFRL to not only weather the storm but to leverage their scale to gain significant market share and acquire struggling smaller brands.
Technology has fundamentally rewired the relationship between brands and consumers.
The Indian consumer has transformed from a passive price-taker to an active, informed, and influential market force.
A quarter-century ago, choices were relatively limited – for example, women largely wore traditional attire (saris, salwar-kameez) and men mostly bought formal shirts and trousers. Today’s consumers are far more trend-conscious, brand-aware, and diversified in their tastes.
One major shift is the rise of casual and Western wear.
In the 1990s, Western casualwear was a niche (mostly among urban youth), whereas ethnic wear was the default daily attire for many, especially women.
Now, Western-style clothing has become dominant in most cities and even smaller towns. Industry data show that Western wear accounts for roughly 70% of the apparel market by value and is expected to grow its share further (projected to reach 72% by 2025, while ethnic/traditional wear drops to ~28%).
This doesn’t mean Indians have given up ethnic fashion – rather, traditional wear has become more occasion-oriented (festivals, weddings, formal events), whereas daily wear has shifted towards jeans, shirts, dresses, activewear etc.
The proliferation of global fashion trends through social media and the influence of Bollywood and celebrities have accelerated this westernisation of wardrobes, especially for the youth.
At the same time, the gender composition of the fashion market has seen a balancing.
Historically, menswear used to command the largest share of India’s apparel market (partly because men more readily bought ready-made garments while many women’s outfits were stitched at home or bought as fabric).
Around 2010, for instance, menswear held over 40% of the market, higher than any other. Even as of 2022, men’s apparel remains slightly ahead in market share – about 46% of overall apparel sales, compared to ~38% for womenswear and 16% for childrenswear.
Menswear ($26 billion) is thus still a bigger segment than womenswear in value terms. The gap, however, is closing as women’s ready-to-wear adoption grows.
Over the past decade, many brands (domestic and international) have aggressively expanded their womenswear ranges, and women shoppers are increasingly buying western outfits, workwear, and casual apparel off-the-rack.
The kids’ apparel segment, while smaller, has also grown steadily (fuelled by rising incomes of young parents). Today’s Indian consumer – man or woman, young or old – is more willing to spend on fashion than previous generations, reflecting higher disposable incomes and a cultural shift where dressing well is seen as an expression of personality and success.
Within product categories, certain niches have boomed in recent years. Notably, sportswear and athleisure have taken off, paralleling global trends.
With more Indians embracing fitness and casual lifestyles, categories like activewear, sneakers, and yoga pants have surged. Analysts note that sports and athleisure brands in India are seeing 15–20% annual growth, one of the fastest among apparel segments.
By one estimate, the athleisure market will reach over $3 billion by 2032. International athletic brands (Nike, Adidas, Puma) and newer local players are vying eagerly for this growing pie.
Similarly, fast fashion – inexpensive, trendy clothing with rapid turnover – has become a significant segment. Global fast-fashion retailers like Zara, H&M, and domestic value-fashion labels (Max, Reliance Trends, etc.) have expanded aggressively.
Fast fashion is projected to account for 25–30% of India’s fashion retail sector by 2030, with sales potentially exceeding $50 billion.
This indicates how much Indian consumers, especially the under-35 demographic, have shifted towards buying more frequently and being trend-responsive.
On the other end, luxury and premium fashion have also made their mark. In the late 90s, luxury fashion was almost non-existent in India aside from a tiny elite. Today, luxury brands from Louis Vuitton to Valentino have flagship stores in Indian metros, and premium designer labels are finding a growing client base. The number of dollar-millionaire households in India has been rising, and they seek high-end fashion as a lifestyle.
However, luxury remains a very small slice of the market – the real volume is in mass and mid-market fashion where the burgeoning middle class shops.
It is important to note that traditional wear is not disappearing – instead, it has evolved and often fused with fashion trends.
For example, young consumers might pair a kurti (tunic) with jeans, or designers create “fusion” Indo-western outfits.
Ethnic wear brands like Manyavar (men’s ethnic attire) or FabIndia (traditional textile-based clothing) have scaled up significantly, showing that pride in Indian heritage outfits persists alongside adoption of global styles.
The key change is that consumers now have far more variety and brand choices than 25 years ago. From budget local labels to international couture, from sarees to streetwear, the Indian fashion shopper can access it all.
In India’s contemporary fashion retail landscape, the most potent force shaping consumer behaviour is no longer the glossy magazine spread or the celebrity billboard, but the authentic, relatable voice of the digital influencer.
What began as a niche marketing channel has exploded into a core pillar of brand strategy, fundamentally altering how fashion is discovered, desired, and purchased.
The Indian influencer marketing industry is a testament to this shift, projected to reach a staggering ₹2,800 crore by 2025, growing at a CAGR of 25%.
The power of influencers lies in their ability to collapse the traditional marketing funnel with remarkable efficiency. A 2024 report by INCA India revealed that 86% of consumers have purchased a product after seeing it recommended by an influencer.
This is particularly effective in fashion, a category driven by visual appeal and social validation. When an influencer showcases a new collection, they are simultaneously providing style inspiration, product reviews, and a direct call to action.
A prime example is the long-standing collaboration between e-commerce giant Myntra and fashion influencer Komal Pandey.
Her “get-the-look” videos and styling reels, often featuring products available on the platform, don’t just create awareness; they generate immediate sales, with her followers often causing specific items to sell out within hours of a post.
While digital-first creators built the foundation of the influencer economy, celebrity influencers continue to wield immense power, but their role is evolving.
Simple endorsements are being replaced by deeper, co-created brand ownership that leverages their personal brand equity.
Perhaps the most significant evolution in Indian influencer marketing is the rise of the regional and vernacular creator.
While macro-influencers in Mumbai and Delhi, like Masoom Minawala Mehta, continue to set broad national trends, the real growth is happening at the grassroots level.
Influencers like Niharika Das (Odia) or Saranya Ayyer (Tamil) connect with their audience on a deep cultural level, making fashion feel more accessible.
A report from late 2024 highlighted that nearly 60% of new online shoppers now come from Tier-2 and Tier-3 cities, a demographic that relies heavily on recommendations from local, relatable creators.
While mega-influencers offer massive reach, brands are increasingly seeing superior returns from partnerships with micro and nano-influencers.
A 2025 report indicated that in India, micro-influencers (10k-100k followers) often have engagement rates 30-40% higher than macro-influencers (500k+ followers).
As the influencer landscape matures, brands must become more strategic. The focus is shifting from one-off campaigns to long-term partnerships.
Furthermore, with platforms like Instagram Reels and YouTube Shorts now accounting for over 75% of content consumed by Gen Z, brands and creators must co-create dynamic, engaging video content.
Static image posts are no longer enough to capture attention in a crowded digital space.
The past decade has been defined by the rise of domestic retail giants who are actively shaping the market through strategic acquisitions and ecosystem-building.
The strategies employed by these two behemoths point towards a fundamental restructuring of the retail industry: the “platformization” of retail. They are moving beyond simply selling products to creating vast, interconnected ecosystems. By controlling brand licensing, manufacturing, supply chains, and both physical and digital distribution channels, they achieve unparalleled economies of scale, gain access to invaluable consumer data, and create powerful cross-selling synergies.
This vertical and horizontal integration erects formidable barriers to entry, making it increasingly difficult for smaller, independent players to compete.
As the Indian fashion retail market looks toward 2030, it faces a complex global environment and a rapidly evolving domestic landscape. Navigating this future will require resilience, agility, and a deep understanding of the market’s new fundamentals.
The industry’s export ambitions face significant geopolitical headwinds. The imposition of a steep 50% tariff by the United States on Indian textile and apparel imports in August 2025 has sent shockwaves through the export community, disrupting a critical trade relationship. This protectionist measure has forced an urgent strategic pivot.
The Indian government and industry bodies are now actively working to de-risk their export portfolio by targeting 40 alternative countries and better leveraging existing Free Trade Agreements (FTAs) with 15 nations.
This episode highlights a crucial imperative for the coming years: building more resilient, diversified, and agile supply chains that are less vulnerable to the caprice of bilateral trade disputes.
The future of growth in Indian fashion retail lies not in the saturated metros but in the vast, heterogeneous landscape of Tier-2, Tier-3, and rural India. Winning this next billion consumers requires moving beyond a one-size-fits-all approach.
Success will be determined by the ability to hyper-localize—curating product assortments that reflect regional tastes, implementing pricing strategies sensitive to local purchasing power, and crafting marketing messages that resonate with diverse cultural nuances.
Furthermore, with the mass-market segment identified as the fastest-growing, the “value equation” becomes paramount.
Brands must innovate to deliver on-trend fashion at accessible price points without compromising on quality, a formula that value-focused chains are already mastering.
While currently a secondary consideration for the mass market, sustainability is steadily moving from a niche concern to a necessary component of brand building.
The growing awareness among Millennial and Gen Z consumers about environmental and ethical issues means that a brand’s stance on sustainability is becoming a key factor in purchasing decisions.
In the long term, brands that proactively embed sustainable practices into their core operations—from sourcing certified organic materials and reducing water consumption to adopting circular business models—will not only mitigate regulatory risk but also build deeper trust and loyalty with the next generation of consumers.
Based on this 25-year analysis, the following strategic imperatives emerge for stakeholders aiming to succeed in the Indian fashion retail market:
