Global fashion executives now rank Asia’s growth markets as their primary sourcing destinations for the next five years.
A recent report published by global consultancy firm McKinsey & Company revealed that India is becoming a key focus for high street fashion brands as they increasingly turn to Asian growth markets, including India, to meet their manufacturing needs.
The report attributed this shift to China’s economic slowdown, changing consumer preferences, and the resurgence of international travel, noting that these factors have made growth in China more challenging.
McKinsey & Company further noted that global fashion executives now rank Asia’s growth markets as their primary sourcing destinations for the next five years. It also highlighted that regulatory incentives from governments in these countries are driving the development of manufacturing capabilities.
The report explained that the Indian government has invested approximately $2.5 billion in production-linked incentives and reforms related to quality control orders, with foreign investment increasing threefold since 2019.
The firm also indicated that India is set to play a more prominent role in the global apparel market, emphasizing that the country’s strong growth is making it a key player, particularly in the mid-market segment. This segment is expected to grow by around 12 to 17 per cent in 2025, compared to the projected low single-digit growth of the global fashion market.
However, the report also pointed out that India recorded the highest percentage of apparel quality failures in 2023, although it suggested that these issues may improve in the near future.
Additionally, the report highlighted that growth in the non-luxury segment will be driven by the expanding middle class and increasing digitisation. It mentioned that India’s middle class currently includes 430 million people—more than the combined middle classes of the US and Western Europe—and is expected to reach 1 billion by 2050, largely from tier-two and -three cities.
The report further noted that Indian fashion customers are becoming more trend-focused, driven by digitization and a large proportion of young consumers. It stated that 66 per cent of India’s population is under the age of 35, amounting to over 808 million people.
The report also emphasized the opportunities in India’s luxury segment, forecasting that the population of ultra-high-net-worth individuals (UHNWI), defined as those with assets exceeding $30 million, will grow by 50 per cent from 2023 to 2028, making it the fastest-growing UHNWI population globally.
It added that aspirational customers, who account for about half of global luxury sales, are expected to increase from 60 million in 2023 to 100 million in 2027.
News courtesy: Money Control