Apparel Retailers Set for Double-Digit Growth in FY ’27 on Tier-2 Demand Surge: India Ratings

Apparel retailers in India are expected to record double-digit revenue growth in FY ’27, with expansion projected to improve to 10.5% from an estimated 9% in FY ’26, driven primarily by sustained demand from Tier-2 and smaller cities, according to a report by India Ratings and Research (Ind-Ra).

The ratings agency noted that while overall growth is poised to accelerate, performance will remain uneven across retail formats. Value retailers are likely to outperform, supported by resilient demand in Tier-2 and beyond markets and the continuing shift from unorganised to organised trade.

In contrast, premium, branded and ethnic apparel players are forecast to witness steadier high single-digit growth. The report attributed this to a gradual rebuilding of consumer confidence, aided by a more evenly distributed wedding calendar compared with FY ’26 and early indications of demand normalisation during the first nine months of FY ’26.

The agency also highlighted the impact of supportive government measures on consumption. Lower income tax rates and rationalised GST, combined with relatively mild inflation, have increased disposable incomes and improved affordability, thereby underpinning retail demand.

Adarsh Gutha, Associate Director, Corporate Ratings at Ind-Ra, stated that the agency expects a steady uplift in the organised apparel retail sector in FY ’27. He indicated that the anticipated growth would be supported by a consumption revival led by improving consumer sentiment, stronger real wage growth and recent policy measures aimed at enhancing household disposable income. He further noted that aspiration-driven demand in the value and luxury segments, along with productivity-led expansion strategies, is likely to drive higher revenue growth alongside margin expansion in FY ’27.

The outlook suggests a constructive operating environment for organised apparel retailers, even as competitive dynamics and format-specific trends continue to shape performance across the sector.