As 2025 underscored a fundamental shift in how Indians shop for fashion by prioritising versatility, comfort over impulse and excess, India’s apparel and fashion sector is entering 2026 with measured optimism. Led by wiser shoppers, faster trend cycles and a clear pivot toward value and operational discipline, growth will be driven less by exuberant consumption and more by precision retailing, supply-chain agility and relevance-led assortments.
With comfort-first clothing, mid-premium fashion, fast-refresh styles and functional everyday wear emerging as core wardrobe staples, apparel’s role as a status symbol is giving way to experience-led spending. Brands are gearing up to fare well on aspects such as speed, storytelling, pricing discipline and omnichannel execution.
However, the sector will have to navigate cost volatility, global trade uncertainties and rising service expectations. With intensifying competition in the sub-Rs 2,500 segment and little room for execution missteps, the year ahead will test both operational resilience and brand relevance.
“In 2026, we expect consumers to continue prioritising comfort-first clothing, premium basics, and durable wardrobe essentials. Tier 2 to 3 markets will remain the biggest growth engines as aspirational spending rises. Hybrid workwear, winterwear and functional everyday fashion will see deeper adoption,” highlighted Deepak Bansal, Whole Time Director, Cantabil Retail India.
A Year Gone By
In 2025, consumption returned with discipline, as consumers shopped more frequently but demanded sharper value, faster fulfilment and greater relevance. Non-metro markets emerged as the key growth engines, supported by offline expansion and omnichannel. Gen Z established itself as a serious spending cohort, particularly in premium streetwear and trend-led categories.
Financial performance across listed players reflected growth, selective recovery. Aditya Birla Fashion and Retail reported total income of Rs 3,931 crore in the first half of the current financial year (H1FY26), up from Rs 3,500 crore a year earlier, while Cantabil Retail posted a 20 per cent year-on-year rise in revenue to Rs 334.7 crore. Raymond Lifestyle recorded 12 per cent growth in H1FY26 income, Vedant Fashions grew revenues 7.2 per cent despite margin pressure.
Arvind Fashions saw profits from continuing operations surge over 60 per cent. Store expansion remained healthy, particularly across tier 2–3 cities, reinforcing the role of physical retail in driving conversions and brand trust. Policy support provided additional tailwinds as standardisation of GST rates at 5 per cent for most textile inputs helped ease long-standing structural issues such as inverted duty structures. Export demand showed early signs of stabilisation.
Shift Towards Value And Flexibility
Shoppers are no longer chasing fashion blindly, with buying behaviour increasingly anchored in value, function and flexibility. Industry leaders note a decisive shift toward comfort-first, versatile apparel and a strong preference for mid-premium price points. Experts noted that growth in 2026 is expected to be selective and disciplined, favouring brands that can clearly justify pricing through quality, utility and relevance.
“Consumer is getting more and more demanding, not only in terms of price but also in terms of service. The last year has underlined that Indian consumers are simultaneously price sensitive and quality obsessed: they want sharper value at every price point, but also expect fast delivery, easy returns, accurate sizing, and responsive customer care as a given,” explained Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI).
For Libas, ethnic wear, fast fashion, and premium-but-accessible segments, particularly women’s fusion and occasion-specific styles under the Rs 2,500 price point, are emerging as strong opportunities, driven largely by impulse buying rather than a shift toward higher premiums.
“Looking ahead to 2026, we expect the momentum in fast fashion and ethnic wear to strengthen further, driven by more weddings, favourable monsoons, and Gen Z’s influence on trends. We are also seeing a rise in impulse buying and pocket-friendly fashion, with customers increasingly investing in complete looks, including accessories and footwear, which raises the importance of sharp pricing amid stiff competition,” emphasised Sidhant Keshwani, Founder and Chief Executive Officer (CEO), Libas.
Market’s Sweet Spot And Omnichannel Presence
The market’s sweet spot is clearly mid-premium, everyday fashion. Mid-premium apparel is becoming the strongest opportunity for brands, driven by customers seeking quality at accessible price points. Categories like men’s casual wear, winterwear and women’s western wear are seeing consistent growth for Cantabil.
Snitch is witnessing performance-inspired casualwear and everyday essentials emerge as the strongest growth categories as consumers seek comfort combined with elevated style. Mehta also noted seeing a slight move back towards formal wear, as opposed to the pre-dominance of casual wear for the last few years. Denim jeans are also slowing down in the same pattern, to be replaced by chinos, but with some percentage of Lycra.
While online remains critical for discovery, offline retail is resurging, especially in tier 2 and 3 cities and wedding markets. While quick commerce is at the early stage in the fashion space, it is making a steady progress as multiple well-known brands are tapping the benefits of 10-minute deliveries.
“A strong shift toward local identity will emerge as homegrown brands and regionally inspired design stories gain momentum. Consumers will expect faster fulfilment, immersive store experiences and seamless omnichannel journeys. Tier 2 and 3 markets will accelerate style adoption,” noted Siddharth Dungarwal, Founder and CEO, Snitch.
Keshwani added that ecommerce continue to lead growth, especially across tier 2 and 3 cities, with quick commerce gaining relevance for convenience-led fashion purchases. Offline stores performed exceptionally well during the wedding season due to their experiential advantage, he mentioned. Dungarwal echoed the same sentiment by noting that hybrid retail behaviour accelerated with online driving discovery and quick conversions, while offline built trust and delivered richer experiences.
“The active/lifestyle segment (including sportswear and athleisure) continues to grow as health and wellness culture spreads, especially among younger consumers and urban professionals. Brands expanding this category online and offline are likely to benefit,” noted Manjula Gandhi, Chief Product Officer, Numero Uno.
Speed And Operational Discipline
Industry leaders are carrying the rising importance of agility, quick responses to shifts in fits, colours and fabrics, into 2026. Speed, both operational and creative, has become a true competitive advantage. Investing in agile supply chains, intelligent inventory placement and rapid design drops are emerging as the key differentiating factors for brands.
Leaders pointed out that trends now shift faster than ever, with sudden surges in demand for specific styles requiring rapid design and replenishment cycles. Another important insight has been the way women consumers plan their festive wardrobes, shopping starts much earlier, almost immediately after Shraddh, leading up to Navratri, Karwa Chauth and Diwali.
“In apparel, people embraced ceremony-wise styling, choosing natural fabrics, rich textures, and handcrafted details that balanced comfort with elevated elegance. There was a clear move toward mixing traditional craft with modern silhouettes, and families increasingly opted for coordinated dressing that felt personal and cohesive,” explained Sumit Arora, President - Apparel, Fabindia.
Benefits Galore, Yet Risks Remain
On the external front, tariff pressures and trade frictions in key export markets remain a headwind, forcing manufacturers and brands to recalibrate pricing strategies, manage costs more tightly and diversify markets to protect profitability. Another barrier that worries brands is demand volatility, which has made forecasting and inventory planning more complex.
“Looking ahead to 2026, volatility in raw material prices, geopolitical disruptions, and demand uncertainty remain key risks for the textile sector. However, opportunities are emerging through market diversification, premiumisation, and sustainable sourcing. The sector outlook remains cautiously optimistic, supported by India’s scale, improving infrastructure, and global brands seeking diversified sourcing beyond traditional hubs,” noted Suketu Shah, CEO, Vishal Fabrics.
However, export demand has shown signs of stabilisation. Marking a healthy improvement in performance, India’s exports of textiles and apparel, including handicrafts, stood at USD 2,855.8 million in November 2025, registering a growth of 9.4 per cent as compared to November 2024 (USD 2,601.5 million).
Additionally, the apparel sector also stands to gain from greater clarity on the goods and services tax (GST) front. Consumers will emerge as the key beneficiaries in 2026, as lower GST rates reduced costs across the textiles value chain. The GST reduction has allowed the companies to strike a healthier balance between passing benefits to consumers and strengthening their margins.
However, Mehta warned that the biggest challenge now facing the domestic industry is the jump of GST from 12 per cent to 18 per cent for products priced over Rs 2,500, since most of the winter clothing and festive/wedding garments would fall over Rs 2,500. “Needless to say, the United States (US) tariffs are the biggest challenge facing the export sector,” he added.
On the trade front, the Free Trade Agreement (FTA), inked on 24 July between India and the United Kingdom, is poised to drive India’s textile sector on a growth trajectory. The agreement presents an opportunity to double the export numbers to the UK market in the next two to three years, provided the other aspects, such as compliance, are also taken care of. India has also been working to conclude FTA negotiations with several countries, as Vice President C P Radhakrishnan also said at an event that needs to urgently expand its network of FTAs to remain competitive in the global textile and apparel market.
With consumers demanding sharper value, faster speed-to-market and consistent quality, success will depend on operational agility, thoughtful pricing and relevance-led assortments across channels. As the industry steps into 2026, the playbook is clear: growth will belong to brands that execute with discipline rather than chase scale at any cost. |
