New Delhi: The foreign direct investment (FDI) norms relaxation for single brand retail in the country will be a major boost for fast fashion majors that are aiming for expansion in their consumer base, says a BMI Research report.
Also, large young adult consumer base, rising disposable income and growth in the middle-income segment make India a “favourable market" for fashion retailers, it said. Besides, India’s improved ranking on the World Bank’s ‘Ease of Doing Business’ ranking—moving up 30 places to rank 100 out of 190 countries—will boost foreign investment in the country, the Fitch group company said.
The government last week permitted 100% FDI in single brand retail, a move towards allowing foreign players to set up own shops in India without government approval for investments. The government has also relaxed mandatory local sourcing requirement of 30%, which has been a long standing demand from players such as Ikea and H&M.
“We believe that recent changes to this policy will bode particularly well for fast fashion majors looking to expand in India," the report said. It further said India is a favourable market for fashion retailers due to the large young adult consumer base in the country, accounting for almost a third of the total population in India.
“Young adults are the core target group for fast fashion majors on the back of their strong interest in fashionable yet affordable apparel," it added.
Furthermore, growth in the middle-income segment will also be a key contributor to the success and expansion of fast fashion majors. With rising disposable income, Indian consumers will be able to spend a greater share of their incomes on non- essential goods and services, the report noted.