Wazir Advisors has released its latest report, “India Apparel Market Review: Dynamics and Direction 2020–2025,” which evaluates the evolving landscape of India’s fashion retail industry. The study reviews the performance of 70 apparel brands and retailers over the last five years, collectively generating revenues of approximately ₹1,34,500 crore in FY25.
The report examines key metrics such as revenue growth, profitability, and marketing investments across different segments, offering insights into structural changes that have influenced the industry between FY2020 and FY2025.
Key Insights from the Report
Value fashion leads growth
Value fashion retailers have emerged as the strongest performers, registering a compound annual growth rate (CAGR) of 24% between FY20 and FY25. Their share in the organized retail market increased from 18% to 29% during the period. Expansion into Tier 2 and Tier 3 cities, improved inventory management, and increased demand from price-conscious consumers contributed significantly to this growth. Over five years, the segment added nearly 2,500 new stores.
Discount-driven retail environment
Discounting has become a permanent feature of the fashion retail market. On Myntra, the average discount offered increased from 28% in 2020 to 43% in 2025. In several high-volume categories, around 60–73% of products are listed with discounts exceeding 50%. After the pandemic, consumers have become highly deal-focused, often waiting for major sale events and comparing prices across multiple platforms. This trend has placed significant pressure on industry margins.
Distribution growth reaching saturation
Retail expansion through physical stores is slowing in several segments such as innerwear, lifestyle brands, and global fashion labels. With most metropolitan and general trade markets already covered, brands are now focusing on increasing revenue per store, premiumizing product offerings, and strengthening digital and exclusive brand outlet channels.
Ethnic wear remains stable and profitable
The ethnic wear segment continues to maintain strong profitability, recording an average profit-after-tax (PAT) margin of around 10%. Demand driven by occasions, premium product offerings, and growing private equity interest has helped the category remain one of the most stable and profitable segments in Indian apparel retail.
Startups expand rapidly but face profitability challenges
Fashion startups have seen rapid revenue growth, increasing nearly nine times from ₹210 crore in FY20 to ₹1,868 crore in FY25. However, most remain unprofitable, posting an average PAT margin of -5.6% in FY25. Although marketing spending has reduced from its earlier peak of 26.8%, it still stands at 14.8% of revenue, highlighting a continued reliance on customer acquisition for growth.
Declining share of apparel in consumer spending
Even though the apparel market has expanded in absolute terms, its share of Private Final Consumption Expenditure (PFCE) has declined from 7.1% in FY13 to 5.1% in FY24. Consumers are increasingly allocating more spending toward services, transportation, and other lifestyle categories.
Commenting on the report, Rohit Bhatiani, Executive Director at Wazir Advisors, stated that while the Indian apparel sector has witnessed substantial growth over the past five years, profitability has not increased at the same pace. He emphasized that excessive dependence on discounting has weakened pricing power across segments.
According to him, the future of value creation in Indian fashion retail will depend on stronger product assortment strategies, improved channel efficiency, and genuine premiumization rather than simply expanding retail footprints. Brands that focus solely on scale without building sustainable margins may struggle to manage the rising costs associated with distribution and heavy discounting.
