India to take centre stage for global fashion brands as Asian growth shifts: McKinsey report

The McKinsey & Company highlights that challenges such as China’s economic slowdown, shifting consumer preferences, and the resumption of international travel are pushing global fashion brands to explore other Asian markets.

Regulatory incentives in these regions are also fostering manufacturing capabilities.

"India is expected to play a more prominent role," McKinsey noted, emphasizing the country’s rising significance in the global apparel market.

India’s mid-market fashion segment is projected to grow by 12-17% in 2025, significantly outpacing the global fashion market’s anticipated single-digit growth.

Despite recording the highest apparel quality failures in 2023, the report predicts improvements, spurred by the Indian government’s $2.5 billion investment in production-linked incentives and quality control reforms, as well as a threefold increase in foreign investments since 2019.

The report also underlines India’s economic strength, forecasting it to become the fourth-largest economy by 2025 with 7% annual growth and the third-largest consumer market by 2027.

Key growth drivers include the expanding middle class and rapid digitization. India’s middle class, comprising 430 million people—larger than those in the US and Western Europe combined—is expected to grow to 1 billion by 2050, primarily from tier-two and tier-three cities.

Additionally, India’s youthful demographic, with 66% of the population under 35, is fostering trend-conscious consumer behaviour, amplified by digital advancements.

In the luxury segment, India’s ultra-high-net-worth individual (UHNWI) population, defined as those with over $30 million in assets, is projected to grow by 50% between 2023 and 2028, making it the fastest-growing UHNWI population globally.

Aspirational customers, who drive half of global luxury sales, are expected to grow from 60 million in 2023 to 100 million by 2027.

The report also identifies emerging potential in other Asian markets, including Japan, signalling a broader shift in global fashion dynamics.