India’s apparel market to hit $146 billion by 2029, but 83% of sales still happen offline

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% of clothing consumption, just as demand shifts towards casual, comfortable and versatile apparel.

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% 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.

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.

83% of the $95.7 billion apparel market, or $79.4 billion, was offline in 2025, against just 17%, or $16.3 billion, online. Within offline, Exclusive Brand Outlets account for 50% of sales, Multi-Brand Outlets 30% and shop-in-shops 20%. Online has an even more concentrated structure: marketplaces account for 80% of e-commerce apparel sales, versus just 20% for brands' D2C websites.

However, seeing as 58% of India's apparel market is rural, worth $55.9 billion, and metro and Tier-1 India together account for only $14.2 billion. So, 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.

Casualwear takes the lead as wardrobes become more versatile

At the same time, casualwear has emerged as the largest apparel occasion, accounting for 31% of the market, ahead of ethnicwear at 27% and formalwear at 26%. The growing preference for clothing is moving between work, leisure and social occasions. In menswear, the trend is visible in demand for denims, T-shirts and athleisure, while womenswear and kidswear are also seeing greater adoption of easy-to-wear styles.

Yet the casualisation of wardrobes is not replacing traditional clothing. Ethnicwear still accounts for 27% of the overall apparel market and about 60% of womenswear, with sarees and salwar suits among the largest categories. Weddings and celebrations continue to support demand for sherwanis, bandhgalas and Indo-Western outfits in menswear.

Menswear remains the largest segment at $38.5 billion, followed by womenswear at $35.6 billion and kidswear at $21.6 billion in 2025. But kidswear is projected to grow fastest through 2029 at a 9.4% CAGR, followed by womenswear at 8.9% and menswear at 8.5%. Womenswear is expected to reach about $55 billion and kidswear around $34 billion by 2029.

The report points to first-time branded buyers, consumers upgrading from unorganised to organised retail and demand for value across price points. In other words, the opportunity is increasingly about aspirationalisation across price points, not premiumisation alone.