Rural demand, casualwear to propel India’s apparel market to $146 bn: CMAI report

India’s domestic apparel market is projected to grow 9% annually to $146.3 billion by 2029 from $95.7 billion in 2025, driven by rural and smaller-town consumption, casualization, and faster growth in womenswear and kidswear, according to a study by the Clothing Manufacturers Association of India (CMAI) and market research and intelligence firm 1Lattice.

The study projects the world’s fourth-largest apparel market to grow at 9% during 2025-29, significantly faster than the US (2%), China (1%), European Union-27 (2%) and the UK (3%).

The textile and apparel sector is the second-largest employer in the country after agriculture. The sector provides direct employment to around 45 million people and indirect livelihoods to more than 100 million people, according to the textile ministry.

The market has recovered sharply since the covid-19 pandemic. It fell from $68.5 billion in 2019 to $49.3 billion in 2020, before rising to $95.7 billion in 2025, representing an 18% compound annual growth rate (CAGR) over the post-pandemic period.

The report found that India’s apparel market is still dependent on physical retail rather than e-commerce.

Offline channels accounted for 83% of apparel sales in 2025, worth $79.4 billion, while online sales were $16.3 billion, or 17% of the market. Exclusive brand outlets accounted for about half of offline sales, while multi-brand outlets accounted for 30% and shop-in-shop formats 20%.

Growth market

The study found that rural India accounted for $55.9 billion, or 58% of the total apparel market, in 2025. Metro and tier-I markets contributed $14.2 billion, tier-II markets $8.5 billion and tier-III and smaller markets $17.1 billion.

“The next phase of growth for India’s apparel industry will increasingly come from markets beyond the metros,” said Santosh Katariya, president, the CMAI. Tier-II and tier-III cities are already contributing significantly to apparel consumption, while rising aspirations are creating demand for a wider choice of brands, formats and fashion, he said.

The regional distribution of the market also shows its breadth. North India accounted for $27.8 billion of consumption in 2025, followed by East at $25.8 billion, South at $22 billion and West at $20.1 billion.

Growth category

Casualwear has emerged as the largest apparel occasion, with a market of $30.8 billion in 2025. Ethnicwear stood at $26.4 billion and formalwear at $26.3 billion, it noted. The shift towards casual clothing shows that consumers’ preferences are growing for comfort, versatility and clothes that can be worn across occasions.

The trend is particularly visible in menswear. The segment was worth $38.5 billion in 2025, with formalwear accounting for $17.1 billion and casualwear $15.5 billion. Shirts and jeans each accounted for 21% of menswear purchases, followed by trousers at 16% and T-shirts at 14%.

“One of the most significant shifts in India’s apparel consumption is the blurring of traditional category boundaries,” said Rahul Mehta, chief mentor, the CMAI. Men’s wear is becoming more casual, comfortable and versatile, while women’s wear is evolving through new silhouettes and Indo-Western styling, he said.

However, casualization does not mean traditional apparel is losing relevance. Ethnicwear accounts for about 60% of womenswear, with sarees and salwar suits among the biggest categories. Weddings and other celebrations also continue to support demand for sherwanis, bandhgalas and Indo-Western outfits in menswear.

The data shows that menswear remains the largest segment, but the growth balance is gradually shifting towards women and children.

Menswear was worth $38.5 billion in 2025, compared with $35.6 billion for womenswear and $21.6 billion for kidswear. According to the report, kidswear is projected to grow at 9.4% annually, womenswear at 8.9% and menswear at 8.5% between 2025 and 2029. Kidswear is expected to reach about $33.9 billion by 2029, while womenswear is projected to reach $54.5 billion.

In womenswear, sarees account for 29% of the market and salwar suits 15%. The report attributed future growth partly to increasing workforce participation, demand for athleisure and the popularity of Indo-Western clothing. It also pointed to rising consumer interest in sustainable and ethical fashion.

The findings come from the Indian Apparel Market Size: A Consumer Research Report 2025, based on a survey of 10,929 consumers across 16 states. The study covered metro and tier-I cities, tier-II and tier-III cities and rural areas, and examined apparel purchases across income groups, demographics, regions, categories and channels. The fieldwork was conducted between November 2025 and February 2026.