India-Emerging Global Fashion Destination

The market size of the Indian fashion and design industry (textiles & apparel based) is as
follows:

Items Present Market Size Expected Market Size

(2006) (2012)
Indian textile & Clothing $47 Billion* $110 Billion*

Exports of textiles & Garments $19 Billion* $60 Billion*

Domestic Market of Textiles & $28 Billion $50 Billion

Clothing
* Ministry of Textiles, GOI Projections

The market of RMG is growing @ 20-25%. 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 are taken
into account (not reflected in above diagram), the market size of women’s wear will be
more than Men’s Wear market.

Indian Textile Art & Craft

Various forms of Indian textile arts are practiced by master craftsmen in different regions
of India. Design sensibilities of Indian have sprung up with the influence of religious
traditions. The finest creations of craftsmen were prepared for rituals and the most skilled
of dyers, painters, weavers have congregated around main centers of religious worship.
India has always been sensitive to colours, which has formed the basis of poetic
inspiration, of music, surcharged with the subtle nuances of mood.

India’s textiles both woven and printed that have dazzled the world have their own
fabulous stories to tell. Stretched along the length and breath of the country each region
has its won characteristic fabric that weaves its history. There are hundreds of different
textiles in India but some of the popular ones are favourites 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 27 States, 7 Union Territories 587 Districts.
More than 70% of the people live in more than 550,000 villages. 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 central parts of India, the winter and Summer seasons are extreme (except
for hilly districts), 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. India’s 67 cities
with populations of half a million or more have 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 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 Ambassodor, Arrow, Wing’s Field and Proline.

In 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, Nike, Esprit, Levis’ and a slew of other domestic and
imported brands have now presence either nationally 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

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.

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.

Currently it is cruising at 9.2% growth rate. 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.