Role of Fashion Industry in Indian Economy

Role of Fashion Industry in Indian Economy

Manisha Beniwal
Department of Textiles (Fashion Technology)
DKTE’S Textile & Engineering Institute, Ichalkaranji, India
Intern at Textile Learner


Indian fashion scenario is known for its cultural heritage, gentility and colorfulness. It came up with the beauty of elegance which has sustained through innumerable decades. The nature of fashion Industry in India is dynamic. Textile industry in India is among the largest segment of India’s capital goods sector. Fashion Industry in India covers a wide range clothing style right from any occasion purpose till normal casual wear. Fashion Industry in India is the contribution of fashion photography, pattern making, garment construction, accessory designing, make-up artist, fabric weaving, fashion editorial, manufacturing unit, modelling, fashion designers here deal with all the available resources and they introduce new designs into market. Indian fashion accounts 0.2% meagre in world market. But it is gradually increasing as people are becoming more fashion conscious and trying to be loyal to brands.

Structure of India Textile Industry:

Structure of Indian Textile Industry
Figure 1: Structure of Indian Textile Industry

When Indian fashion industry is taken under consideration the textile industries which works in different sectors comes up with new brands create trends which become fashion and lead to develop fashion influencer. India’s textile industry is comprised mostly of small-scale, spinning, weaving, composite, power loom, handloom, knitting, hosiery, etc. These industries play a vital role in Indian economy. These are divided into organized and unorganised way and it further include:

Composite Mills: Composite mills are the one that comprises of different spinning, weaving, and processing related activities done under one roof. It works in Integrated form. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially “sick.”

Spinning: Spinning is the process of converting cotton or man made fiber into yarn to be used for weaving and knitting. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in India’s textile industry. Ring, rotor, Air-jet are the different types of spinners used.

Weaving and Knitting: Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. India’s weaving and knitting sector remains highly fragmented, small-scale, and labor-intensive. This sector consists of about 3.9 million handlooms, 380,000 “power loom” enterprises that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. Weaving activity takes place interlacing warp and weft whereas knitting is done with interlooping courses and whales.

Power loom: Are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers.

Handloom: Handloom is the loom which weaves cloth without using electricity. Earlier before the use of technology handloom where the one which were responsible for manufacturing cloths. The process involves entwining set of vertical threads warp with set of horizontal threads weft.

Indian Economy:
India recorded it’s highest-ever textiles and apparel exports in the financial year 2021-22 at USD 44.4 billion. Export of ready-made garments stood at USD 16 billion with 36% share showing a growth of 31 per cent and 3 per cent during 2021-22. Man- made textiles shows 51% growth in 2021-22. The growth of GDP(Gross domestic product) during FY2022 is found to be 8.7 %. The global textile and apparel trade has grown at a CAGR of 4% since 2005 to reach US$ 839 billion in 2019 and is expected to reach US$ 1 trillion by 2025, growing at a CAGR of 3%. Apparel dominated T&A trade with a 58% share in the overall trade value, followed by fabrics with a share of 19%.

Textile Industry Analysis as per market size
Figure 2: Textile Industry Analysis as per market size

Role of Fashion Industry in Indian Economy:
Fashion Industry comes into limelight the major contribution comes through Textile Industries. While estimating, Textile industry plays a vital role in the economy. The Indian textile industry is one of the largest sectors in the economy in terms of output, foreign exchange earnings and employment in India. It contributes 20 per cent of industrial production, 9 per cent of excise collections, 18 per cent of employment in industrial sector. The sector employs nearly 35 million people and is the second highest employer in the country. The textile sector also  contribute to rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ people belonging to rural and semi-urban areas. It has been found that one out of every six households in the country depends directly or indirectly on this sector. India has several advantages in the textile sector, including large availability of raw material and labor. It has the largest cotton acreage, of about nine million hectares and is the third largest producer of cotton fiber in the world. The textile industry is also labour intensive, thus India has an advantage. When the process of manufacturing a garment is considered it starts from fibre and ends with the consumer

Fibre -> Yarn -> Fabric -> Apparel -> Consumer

Market Segment of fashion Industry in India so as to understand how Industries cater all the market so as to satisfy consumers need and wants and how it add to Indian Economy

Gender-related segment – Small clothing retailers use gender-related segments. For example -small independent stores may sell lines for men and women. These clothing lines include casual and business attire for men and women in the fashion market segmentation. It varies as menswear, womenswear, kids wear.

Age-related segment – Age is another factor that helps clothes retailers determines their buying audiences. Many clothing retailers target teenage girls with trendy Fashion. As per the age group the style vary so as the prices get vary and its but obvious that age has huge impact on buying decision

Geographic Segments – The customers prefer clothing from different regions or geographical areas. Weather determines the clothing of the people for example – people in warmer places wear shorts and swimsuits whereas in colder places they wear long jackets. Season, culture and many other factors do matter when industry do forecast fashion.

Lifestyle Segmentation – Fashion market segmentation includes small clothing retailers, manufacturers, and product selections. Lifestyle segmentation is all about the preferences of consumer to buy. It is practice of learning actual buyers in a group.

Importance of Fashion Industry in Indian Economy:
From Power loom to Air- jet, the textile sector is extremely gone under various transformations, with the help of advancement in machines it has achieved many achievements and it is contributing important role in Indian economy. It is one of the biggest sectors, the industry has about 4.5 crore employed workers which also includes 35.22 lakh handloom workers all across the nation. There are several materials and raw materials that are exported from India to the other parts of the world and between April-December 2021, it stood at US$ 29.8 billion. This market is actually expected to be worth more than US$ 209 billion by 2029.India is the world’s largest producer of cotton. In the year October 2021-September 2022, production stood at 360.13 lakh bales for the crop. In the year 2020-21, 1.13 million tonnes of cotton yarn were exported from India. The textile industry in India has also witnessed a spurt of investment not just from our own country but also from several international countries and companies. From April 2000-December 2021, the industry (including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$ 3.93 billion. The textile industry has been very beneficial for India’s economy. Since India does a worldwide trade of clothing and textiles, the GDP of India has really boosted which has brought a huge amount of revenue to India. It has 28 % expected sector CAGR, 5 % Share in Indian GDP, second largest employment provider after agriculture. The driving force for growth rate as compared to previous years is organised retail and e-commerce, focus on end user demands, large and growing domestic market.

Thus role of fashion industry in Indian economy is significantly important and it do contributes in all aspects to economy. There are various sectors that play role in India’s Economy and textile is one that is doing well so as to get developed nation in terms of Economy. It is an important asset for Indian Economy.


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Images References:

  1. Structure of Indian Textile Industry
  2. Textile Industry Analysis

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