NEW DELHI: For India’s apparel industry, the larger cohort of consumers now come from outside the country’s biggest cities, with rural India accounting for nearly 58 per cent of clothing consumption, just as demand shifts towards casual, comfortable and versatile apparel, according to a report in Fortune India.
The domestic market, valued at $95.7 billion (around ₹8 lakh crore) in 2025, is expected to reach $146.3 billion (around ₹12 lakh crore) by 2029, growing at a 9 per cent compound annual growth rate (CAGR), according to a new study by the Clothing Manufacturers Association of India (CMAI) and 1Lattice.
Of the $95.7 billion market in 2025, rural India accounted for $55.9 billion, while metro and tier-1 markets together contributed $14.2 billion. Tier-2 markets accounted for $8.5 billion and tier-3 and smaller markets for another $17.1 billion.
Of the $95.7 billion market in 2025, rural India accounted for $55.9 billion, while metro and tier-1 markets together contributed $14.2 billion. Tier-2 markets accounted for $8.5 billion and tier-3 and smaller markets for another $17.1 billion.
That makes smaller towns and rural markets central to the industry’s next growth phase, rather than simply an extension of the urban opportunity.
Santosh Katariya, president of CMAI, said the next phase of growth would increasingly come from markets beyond the metros. “Tier-2 and tier-3 cities are already contributing significantly to apparel consumption, while rising aspirations are creating demand for a wider choice of brands, formats and fashion,” Katariya said.
The online opportunity
Despite the rise of e-commerce, physical stores remain crucial. Almost 83 per cent of the $95.7 billion apparel market, or $79.4 billion, was offline in 2025, against just 17 per cent, or $16.3 billion, online. Within offline, exclusive brand outlets account for 50 per cent of sales, multi-brand outlets 30 per cent and shop-in-shops 20 per cent. Online has an even more concentrated structure: marketplaces account for 80 per cent of e-commerce apparel sales, versus just 20 per cent for brands’ D2C websites.
However, seeing as 58 per cent of India’s apparel market is rural, worth $55.9 billion, and metro and tier-1 India together account for only $14.2 billion, even modest increases in online penetration outside large cities could translate into a substantial e-commerce opportunity simply because the underlying consumption base is so large.
The study is based on a survey of 10,929 consumers across 16 states.
Casual wear takes the lead as wardrobes become more versatile
At the same time, casualwear has emerged as the largest apparel occasion, accounting for 31 per cent of the market, ahead of ethnic wear at 27 per cent and formal wear at 26 per cent. The growing preference for clothing is moving between work, leisure and social occasions. In mens’ wear, the trend is visible in demand for denims, T-shirts and athleisure, while womens’ wear and kids wear are also seeing greater adoption of easy-to-wear styles.
Yet the casualisation of wardrobes is not replacing traditional clothing. Ethnic wear still accounts for 27 per cent of the overall apparel market and about 60 per cent of womens’ wear, with sarees and salwar suits among the largest categories. Weddings and celebrations continue to support demand for sherwanis, bandhgalas and Indo-Western outfits in mens’ wear.
Mens’ wear remains the largest segment at $38.5 billion, followed by womens’ wear at $35.6 billion and kids wear at $21.6 billion in 2025. But kids wear is projected to grow fastest through 2029 at a 9.4 per cent CAGR, followed by womens’ wear at 8.9 per cent and mens’ wear at 8.5 per cent. Womens’ wear is expected to reach about $55 billion and kids wear around $34 billion by 2029.
