Apparel - Footwear & Accessories

The domestic activewear segment is projected to grow from ₹7,600 crore in 2023 to ₹16,000 crore by 2028, implying a strong multi-year CAGR driven by fitness adoption, athleisure normalisation and rising disposable incomes. This structural shift is attracting significant capital investment from both domestic and international players, expanding the overall category TAM. Brands with established distribution and product credibility in sportswear and performance apparel are best positioned to capture this growth.

Metro Brands' 14.2% revenue growth and 9% volume increase in FY26 reflect a durable consumer shift toward branded, organised footwear retail over unorganised alternatives. Rising aspirational spending among India's urban middle class is supporting average selling price expansion alongside volume growth. Continued store rollouts by organised players are deepening geographic penetration and reinforcing brand loyalty.

Lehar Footwears' 150% capacity expansion in sports footwear signals growing confidence in domestic demand and the viability of local manufacturing at scale. Increased domestic supply can reduce import dependence, improve margins and shorten lead times for retailers. This trend aligns with government Make-in-India incentives that continue to support capex in the footwear manufacturing ecosystem.

VKC's patent for recyclable-footwear technology illustrates how intellectual property around eco-friendly materials can create durable competitive moats in an increasingly ESG-conscious consumer environment. Regulatory and consumer pressure on single-use plastics and carbon footprints is accelerating demand for sustainable product lines across price points. Early movers in recyclable and low-impact footwear stand to benefit from both premium pricing and preferential retailer shelf space.

The entry of global retail formats such as Carrefour via Apparel Group is compelling domestic players to accelerate investment in omnichannel infrastructure, supply chain efficiency and modern store formats. This competitive pressure is ultimately a structural positive, raising the operational bar and improving the consumer experience across the sector. Incumbents that adapt quickly can leverage their existing brand equity and distribution networks to defend and grow market share.

Potential additional US tariffs represent a material threat to India's largest apparel export market at a time when ready-made garment exports have already declined. Industry bodies have flagged that further tariff escalation could structurally disadvantage Indian exporters relative to competitors with preferential trade access. Export-dependent manufacturers face margin compression and demand uncertainty until a bilateral trade framework provides greater clarity.

Persistent inflation and elevated energy costs are squeezing operating margins for apparel manufacturers, particularly those without pricing power or hedging mechanisms. These input cost pressures compound the revenue headwind from declining export volumes, creating a dual squeeze on profitability for mid-tier and export-oriented producers. Without productivity improvements or cost pass-through, margin recovery will be slow.

The simultaneous Indian market entry of Lululemon and Fabletics (via Reliance Brands) raises the competitive intensity in the high-growth activewear segment precisely when domestic brands are scaling up. International brands bring superior product technology, global marketing budgets and aspirational positioning that can erode domestic players' pricing power and market share. Domestic activewear brands will need to accelerate innovation and brand investment to defend their positions.

Ongoing geopolitical tensions, including Russia-related sanctions and broader trade fragmentation, are disrupting raw material and finished goods supply chains for Indian apparel players. Sourcing cost volatility makes inventory planning and margin management more difficult, particularly for smaller brands without diversified supplier bases. This structural uncertainty is likely to persist over the medium term, requiring more sophisticated supply-chain risk management.

As organised retail expands aggressively through new store formats and international entrants, price competition in mass and mid-market segments is intensifying, compressing margins for incumbents. The influx of new retail formats and brands increases consumer choice but also raises customer acquisition costs and promotional spending requirements. Brands without clear differentiation risk being commoditised in a more crowded marketplace.