Indian Fashion Industry: Making a Global Mark
The fashion industry is one of the fastest changing and most dynamic industries in the world today. The Indian fashion industry is experiencing a “Boom” thanks to the Indian consumer becoming more fashion conscious. It is the gigantic Indian fashion consuming public that will continue to set the growth trends for its fashion industry.
The Indian fashion industry is also at an advantage over other countries as far as its growth prospects are concerned because India is the third-largest cotton producing country in the world and also possesses an abundance of talented designers.
A key growth sector
In the past one decade the Indian fashion industry has moved from the embryonic stage to a blossoming takeoff. Fashion designers have contributed substantially to the spread of fashion as a driving force, both among Indian consumers and select segments of western markets. This is, however, only the tip of the iceberg. It has to reach a level to propel the Indian fashion industry to the world's center-stage to make a name for the country's enterprise and the retail markets.
According to a recent study commissioned by the Fashion Design Council of India (FDCI) and conducted by management consultants KPMG, designer wear in India has been identified as a key growth sector. The study forecasts good tidings for the Indian fashion design industry and says it is expected to grow to Rs.1, 000 crore from the current Rs.180 crore within the next five to 10 years mainly because Indian companies are rushing to invest big sums in the industry.
The retailing industry is estimated at Rs.9, 30,000 crore to grow at 5 per cent annually and the organised retailing is a Rs.35, 000 crore market. The fashion sector in India commands a lion's share in the country's organised retail pie.
Determined to make inroads in the global market, India’s burgeoning fashion industry and the government are increasingly moving in sync as couture houses race to catch up with prêt lines that are already in stores worldwide.
Four events this year are firm indicators of how Indian fashion is fast consolidating its hold on the global fashion mindset:
- The first is the decision of the Fashion Design Council of India (FDCI), the interface between the government and the industry, to hold two India Fashion Weeks every year instead of one in line with international practices.
- The second is the initiation of a Trend Dialogue between the government and designers to inculcate in them the concept of fashion.
- The third is the commerce ministry’s decision to participate in The Sourcing Zone, one of the largest, most compressive and cost effective apparel trade events in the US that caters to 3,500 exhibitors, 5,000 brands and 90,000 attendees. The Sourcing Zone is the destination for product development groups to find new trends and new niches in fashion at one efficient, focussed location during the largest apparel market week in the world. The event will be held at Las Vegas in February 21-24, 2006.
- The fourth is the Indian government’s decision to confer university status on the National Institute of Fashion Technology (NIFT), which kicked off the fashion revolution in the country with its founding in 1986. Before NIFT, there was no formal teaching of fashion in India.
The vision of Indian textile industry by 2010 AD definitely envisages that at least 20 Indian apparel brands become nationally and internationally recognizable. Even small countries have acquired brands through mergers and acquisitions or promotions.
India with its vast potential and strength needs to make necessary financial investments for such an ambitious task. The financial outlay will include not only the Government's budget but also the budget allocations from different export promotion councils.
Over the next 10 years it is also estimated that the key players in the industry will witness a compounded annual growth rate of up to 40 per cent. The Indian designer wear industry at present comprises a small number of designers who, though having their own outlets, do not have resources to grow in size and reach economies of scale.
Financial backing by the government and the financial institutions would help in bringing about organised investment into this sector and result in better marketing options. This could pave the way for corporatisation of the industry. Corporatisation would put the industry into a business module so that designer labels would function like any other company in terms of marketing and branding.
Experts predict booming growth
The Indian apparel industry combining both the export and domestic sectors represents a monolithic Rs.550 billion enterprise. Considering India's long heritage in textile industry and traditional creativity, this performance still appears below the actual potential. Currently, the worldwide designer wear market is estimated at $35 billion, with a 9 per cent growth rate, with the Indian fashion industry making up barely 0.1 per cent of the international industry's net worth.
A ccording to the KPMG study, the designer wear fashion industry in India estimated to grow to Rs.10 billion by 2010. Experts in the fashion trade estimate the annual turnover of the industry to be about Rs.60, 000 crore. The turnover is expected to double in the next couple of years, thanks to rising disposable incomes and exposure to western media. Industry experts also foresee an average growth of about 10-12 per cent in the Indian fashion industry in the coming years. However, the growth rate could be more than 15 per cent, provided infrastructural and other logistical bottlenecks are removed.
Smooth road ahead
The Indian fashion industry faces brighter prospects ever since the quota regime ended on January 1, 2005. A quota-free era heralds promise for growth in the textile business for countries such as India and its larger rival China. Both the countries are among the largest exporters of textile garments and fabrics.
The quota regime restricted free export of materials and garments from the developing countries, giving an edge to developed ones, such as the US. The end of the quota regime signifies the potential for an exponential growth for the fashion industries of all the countries that had faced quota restrictions earlier.
Some facts about the fashion industry
- The total apparel market in India is estimated at around Rs.20, 000 crore. The branded apparel market's size is about a fourth of this or Rs.5, 000 crore.
- Designer wear comprises just about 0.2 per cent of the branded apparel market.
- The organized market for designer apparel is over Rs.250 crore.
- Designer wear accounts for less than 1 per cent of the apparel market
- The global market for designer wear, however, is 5 per cent of total apparel market
- The global market for designer wear industry is largely in the small-scale sector
- Consumers for designer wear have an annual household income of Rs.10 lakh-plus. There are 3 lakh such households growing at 40-45 per cent
- Designer wear industry is expected to grow to Rs.1,000 crore by 2015.
- More than 81 per cent of the population is below 45 years, who are the fashion conscious.
- The growth of the branded apparel industry in the interim has been a humungous Rs.25, 000 crore (Rs.250 billion)