ICRA Projects Growth For Indian Garment Industry In FY25
The Indian garment industry is poised for a strong recovery, with ICRA projecting a revenue growth of 12–14% in FY2025 and 9–11% in FY2026, driven by the global China Plus One sourcing strategy and inventory correction by global retailers. This comes after apparel exports from India rose 11.6% year-on-year during April–January FY2025, rebounding from a 10% decline in FY2024.
According to ICRA’s latest industry report, the global apparel trade, which had contracted by 7% in 2023 to $520 billion, stabilized in calendar year 2024, with import demand from the US and EU—accounting for over 55% of global trade—registering a modest 2% year-on-year increase in the first 11 months of CY2024.
Indian apparel exports to the US and EU (including the UK) rebounded sharply in FY2025, growing 13.8% and 11.0% year-on-year, respectively, in the first nine months. The resurgence was fueled by renewed demand, global buyers seeking supply diversification, and geopolitical disruptions in competing markets like Bangladesh. Additionally, a weaker Indian rupee supported export growth in INR terms, boosting realisations by 160 basis points during the same period.
Despite this growth outlook, ICRA cautions that challenges remain. Inflationary pressures, sluggish economic growth in key Western markets, and uncertainties around US trade policies could dampen momentum. Operating margins are also expected to face pressure, with a projected decline of 50–75 basis points due to rising labour and other operational costs.
The report highlights an ongoing trend of high capital expenditure and inorganic expansion among Indian apparel manufacturers. With Bangladesh set to graduate from its Least Developed Country (LDC) status in 1.5 years, Indian exporters are intensifying efforts to attract global orders, aided by policy support and investment in capacity building. Capital expenditure is expected to remain elevated at 5–8% of turnover in both FY2025 and FY2026, reflecting the industry’s strategic push to consolidate its position as a preferred global sourcing hub.
