Apparel industry will grow to Rs. 2.74 lakh crores by 2016

– Care Research

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India’s apparel industry is likely to grow at about eight per cent annually and reach Rs. 2,74,600 crores over the next three years, according to credit rating agency Care Research.

“The domestic apparel industry will grow at a CAGR of about 8 per cent from Rs. 2,02,600 crores in FY12 to Rs. 2,74,600 crores in FY16. Policy reforms, revival in economy and entry of new brands to support recovery of apparel demand in FY14,” Care Research said in its recent report.

The industry grew at a CAGR of 10 per cent from Rs. 1,26,000 crores in FY07 to Rs. 2,02,600 crores in FY12. The growth is attributed to an upsurge in the economy coupled with the rise in per capita disposable income.

Factors like the changing fashion trends, growing consumer class and rising urbanisation have led to the growth in the apparel industry. Increasing retail penetration, growing service class and the expanding share of the designer wear have also been the drivers of growth, the agency said.

However, on account of overall slowdown in the economy, the apparel industry witnessed a lower growth in the past couple of years. The industry is estimated to have grown at a lower rate of about 4-5 per cent Y-o-Y in FY13.

Care Research expects impact of recent slowdown to persist and demand to recover gradually. The various measures/means which are expected to aid recovery in apparel demand in FY14 include resumption of zero excise duty on readymade garments and made-ups announced in the 2013-14 Budget. The expected revival in the economy in FY14 will help boost demand for apparels and aid faster clearance of investment proposals of foreign retail brands, the report added.