Tracking consumption: Clothing, footwear spends shrank 7.1% in FY24

Indian households’ spending on 'clothing and footwear' plunged to a three-year low and a tad under pre-pandemic levels in 2023-24, as per disaggregated national accounts numbers released by the National Statistical Office.

 

This marked the second straight year of contraction in such spending after a 1.4 per cent drop recorded through 2022-23 (FY23), and economists termed it a reflection of consumers cutting back on discretionary demand amid a period of high inflation and stagnating wages.

 

Expenditure on the 'clothing and footwear' segment fell by over 7 per cent to just under ₹4.53 trillion in FY24 from ₹4.87 trillion in FY23. Those spends were 0.1 per cent lower than 2019-20, when Indians purchased clothing and footwear worth a little over ₹4.53 trillion. The Covid-19 pandemic that scuppered economic activity, had dragged clothing and footwear spends down 15 per cent in 2020-21.

 

“Inflation in the ‘clothing & footwear segment’ stood at around 9 per cent in FY23 and 7.2 per cent in FY24. In a way, people prioritised other essential expenditures like food, health over lifestyle expenditure,” averred Paras Jasrai, associate director, India Ratings. 

 

Within the segment, while footwear purchases dropped nearly 2 per cent ₹99,500 crore in FY24 from ₹1.01 trillion in FY23, expenditure on ‘clothing’ declined by a sharper 8.5 per cent to ₹3.53 trillion from ₹3.86 trillion in the previous year. Madan Sabnavis, chief economist, Bank of Baroda says that apart from high inflation during this time period, rural demand continued to lag, with wages suffering most in the wake of the Covid pandemic-induced lockdowns. 

 

“Poor consumption demand has been reflected by other macro- indicators as well, particularly the consumer non- durable segment. Wages have been more or less stagnant in the past few years. All of this then affects the consumption of discretionary items, which is what is happening with the clothing & footwear segment,” he added.  

 

Sudarshan Jain, president, Knitwear and Apparel Manufacturers Association of Ludhiana, said the clothing industry is still facing an uphill task in reviving the demand, while cheap imports from countries like Bangladesh and Vietnam flooded the Indian market and squeezed domestic players’ margins. “Even the turnover recorded at the end of FY 25 by the clothing industry isn't able to surpass the turnover levels recorded in the pre-covid year. This points to the precarious state of the sector in the country. Income stagnation, especially for salaried workers is a real issue, which should be looked at and measures undertaken to revive the demand,” he added.