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India-Emerging Global Fashion Destination

The market size of the Indian textiles & apparel industry, which forms the basis for
fashion and design industry, is as follows:

Items Present Market Size Expected Market Size

(2008) (2015)
Indian textile & Clothing $52 Billion* $100 Billion*

Exports of textiles & Garments $22 Billion* $43 Billion*

Domestic Market of Textiles & $30 Billion $57 Billion

Clothing

The Indian Textile exports are growing @ CAGR of 8% and Apparel Exports @ 12 %
and domestic demand of Textiles and Apparel growing at CAGR of 10%. Leading
Players in RMG segment include Madura Garments, Arvind and Raymond. The market
for RMG for men’s wear is growing, but if unstitched and semi-stitched apparel items of
women’s wear, such as saris, dhotis, scarves, stoles and shawls, are taken into account
(not reflected in above table), the market size of women’s wear will be more than Men’s
Wear market.

The share of Knitted fabrics production has increased by 5%, from 17% to 22%, during
the period 2001-09 and this increment has outperformed woven fabrics. Looking to world
trends, the share of knitted fabrics should further increase.
80%
Knitted Woven
70%

60%
78% 65%
50%

40%

30%

20% 35%

22%
10%

0%
2008 2015

Indian Textile Art & Craft

Various forms of Indian textile arts are practiced by master craftsmen in different regions
of India. Design sensibilities of Indian are significantly influenced by religious traditions.
The finest creations of the craftsmen are made for rituals. The most skilled of dyers,
printers, weavers get located around main centers of religious worship. Indian people are
sensitive to colours, which often form the basis of poetic inspiration and subtle nuances
of mood in classical music.

India’s textiles, both woven and printed, have their own fabulous stories to tell. Stretched
along the length and breath of the country each region has its own characteristic fabric
that weaves its history. There are hundreds of different textiles in India, but some of the
popular ones become favorites with everyone.

Understanding Indian Market

Foreign companies looking to tap the potential of the Indian market need to understand
that India is not one market, but many markets fragmented by income and growth rates,
language, culture and geography. There are 28 States, 7 Union Territories 626 Districts.
More than 70% of the people live in more than 638,635 villages (2001 Censuses).
Languages are split into 18 major officially spoken, within which there are more than 482
different dialects and sub dialects.

The design and colour sensibility and art form differ not only from State to State but in
many cases may be from district to district. More than 100 textile art forms are practiced
in different parts of the Indian States.

There are extremes in climate and geography. In north and North-Eastern States and to
some extent in central parts of India, the winter, and summer (except for hilly districts)
are extreme, and in the western and southern India, both winter and summer are mild.

Growing Retail Industry

The retail market size in India is estimated at $300 billion, which is expected to grow to
$427 billion by 2010.Forecast Growth rate for the Indian retailing industry is roughly
8.3% for 2003-2008. The structure of retailing is developing rapidly with malls becoming
increasingly common in large cities, and development plans being projected at 150 new
shopping malls by 2008.

Currently, there are less than 50 hypermarkets in India, operated by 4-5 big retailers like
Pantaloon, Shopper’s Stop, Life Style, Central, Pyramid and Globus. In sixty seven cities
of India, with populations of half a million or more, there is good potential to absorb
many more hypermarkets in the next 4-5 years.

According to the Earnest & Young report, returns on foreign investment in retailing in
India are likely to be greater than China because large Indian retailers are much smaller
than their Chinese counterparts. International retailers are therefore likely to find the
competitive environment in India easier for achieving market share and growth.
The KPMG report finds that specialised retailers are coming up rapidly and Indian
retailing is undergoing a slow but deep-rooted shift away from total reliance on countless
small family-run stores towards larger, more formal retail outlets.

According to a recent study by AT Kearney, India was listed at the top of its Global
Retail Development Index 2006, which measures the most attractive countries for
international retail expansion.

Indian Brands

Over the years, Indian Brands have grown in the last decade. In the seventies and earlier
there was hardly any known brand. In that period, only tailor stitched garments were in
vogue. However, there were some textile brands (manufacturers brands), which became
very famous in 1970-80s such as Binny, Century, Finley, Bombay Dyeing, DCM,
Maftlal, JCT etc. Some retailers’ brands, in metro cities, that were also selling during
this period were Snowhite, Jainsons, Sharma’s, and Chirag Din.

In addition to above, in the eighties some brands appeared in the market such as,
Raymond’s Park Avenue, Bata’s Ambassador, Arrow, Wing’s Field and Proline.

In the nineties, after liberlisation of Indian economy, there emerged more than 100
leading brands that jostled for consumer mind space. Van Heusen, Louis Philippe, San
Frisco, Peter England, Allen Solly and Byford (of Madura Garments, a division of Indian
Rayon); Arrow, Lee, and so on (of Arvind); Raymond, with its offerings of Park Avenue,
Parx and the recently acquired Color Plus; Indigo Nation and Scullers, owned by Indus
League; Wills Lifestyle, promoted by ITC; Zodiac; Provogue, Addidas, Tommy Hilfiger,
Lacoste, Benetton, Reebok, Wrangler, Nike, Esprit, Levis’ and a slew of other domestic
and imported brands have now presence either pan-India or in a particular region.

With the majority of the population in India still restricted by limited income and low
exposure to fashion, there is continued emphasis on value for money. However, attitudes
are evolving as advertising and improving living standards foster greater brand awareness
and loyalty. There is no shortage of opportunities for companies that take the time to
understand this complex marketplace of India.

Demographic and Economic Profile

Presently, India’s population is 1.1 Billion and is projected to be 1.39 Billion by 2030.
Although India occupies only 2.4% of the world's land area, it supports over 16% of the
world's population. The age profile of the Indian population is as under;
Male population is dominant in India with 61.74%. The working class of age group 15-59
is 57.7%, equivalent to 593 million. 54% of Indian population is estimated to be under
the age of 25. Male population is projected to be dominant in India with 51.80% by 2026.
Working class population in the age-group 15-59 years (83%), is expected to increase
from 57.70% (593 Mn) to 64.30% (900 Mn) from 2001 to 2026 (Indian Census). This
will influence the purchasing trends for clothing in future

According to UN statistics, the population of India will overtake China’s population.

Changing Middle Class Format

The traditional format of Indian population divided into poor, middle class and rich has
now changed. The middle class segment, according to income level, now is divided into
‘lower’ middle class, ‘middle’ middle class and ‘upper’ middle class segments.
The upper middle and high-income urban households are estimated to grow to 38.2
million in 2007 from 14.6 million in 2000. The size of the middle-class population at 280
million (assuming 5 per household) exceeds the population of both the US and the EU,
and represents a powerful Indian consumer market. The middle-class forms the backbone
of the India market story and it is the rising incomes in the young middle-class population
that is fuelling its growth.

At present, Indian female population is 482 million and is growing. According to a study,
propensity to spend in the case of working women has been observed to be higher by
around 1.3 times as compared to a housewife. Women would lead growth in organised
retail, since working women prefer to go to a single location for purchase, while coming
out of their work places.

Consulting firm McKinsey & Co, and Nasscom, estimate that the size of the Indian
outsourcing industry will be $ 21 billion to $ 24 billion in 2008. As such, young Indians,
between 20 and 24 years, are finding jobs straight out of college. They have disposable
income that's totally discretionary. This is changing the attitude of young people towards
life style products, consumer durables and fashion.

India achieved 8.5% GDP growth in 2006, significantly expanding manufacturing. In

2008 it was cruising at 9.2% growth rate till the time global recession took over. India is
capitalizing on its large numbers of well-educated people skilled in the English language
to become a major exporter of software services and software workers.