In India, the fashion industry is regulated by a wide range of laws and legislations that are in place to protect the rights of consumers and to prevent unfair practices within the industry.
This blog explores the legal framework governing India’s fashion industry, encompassing consumer protection, intellectual property, labor, and environmental laws. It also examines the impact of initiatives like “Make in India” on the textile sector, along with efforts to foster global fashion brands.
The Indian Fashion Industry
In India, the fashion industry is a highly regulated one. The country has a number of laws and legislations that govern the fashion industry, most notably the Trade Marks Act, the Copyright Act and the Designs Act.
Additionally, there are a number of specific regulations applicable to the fashion industry, such as those relating to labelling and advertising.
The Market of Indian Fashion Industry
Recent reports project a significant surge in the Indian fashion industry, estimating a leap from ₹ 200 crore to ₹ 1,000 crore over the next five to ten years. Despite the global designer wear market soaring at $35 billion with a 9% growth rate, India contributes a mere 0.1% to this colossal figure. The overall Indian apparel market is valued at around ₹ 20,000 crore, with branded apparel accounting for ₹ 5,000 crore, where designer wear constitutes a modest 0.2%.
Currently, the highest turnover within the designer wear segment is approximately ₹ 25 crore, while other renowned names boast turnovers ranging from ₹ 10-15 crore. Despite these figures, the outlook for substantial growth in the Indian fashion industry appears somewhat cautious, emphasising the challenges and competitive landscape within the sector.
In navigating the trajectory of the Indian fashion market, the road to achieving substantial growth and global prominence may require strategic innovations and industry-wide collaboration to capitalise on the immense potential lying ahead.
Figure of Fashion Industry
The figure of the fashion industry is intricately woven with dynamic statistics and promising projections. Currently, the organised market for designer apparel stands at approximately ₹ 250 crore, constituting less than 1 percent of the overall apparel market. On a global scale, designer wear accounts for 5 percent of the total apparel market, with a significant reliance on the small-scale sector.
The target consumer base for designer wear is characterised by households with a yearly income of ₹ 10 lakh or more, and this segment is witnessing a remarkable growth of 40-45 percent among 3 lakh such households. Projections for the future are equally ambitious, anticipating the designer wear industry to burgeon to ₹ 1,000 crore by 2015. Notably, over 81 percent of the population below 45 years displays a keen fashion consciousness, hinting at a robust and expanding market.
Fashion designers and management experts foresee an average growth rate of 10-12 percent for the Indian fashion industry in the imminent years. However, the potential for accelerated growth exceeding 15 percent remains contingent on overcoming infrastructural and logistical bottlenecks and drawbacks, paving the way for a thriving and progressive fashion landscape in India.
Legal Actions
The Competition Act of 1956 prohibits any abuse of market power by any person and provides for the punishment of offenders. The Trade Marks Act, 1970, provides for trademark registration and the protection of trademarks against unauthorized use.
The Designs Act 1926 protects the design of goods and provides for the registration of designs. The Copyright Act 1957 protects literary and artistic works against unauthorized reproduction.
The Trademark (Amendment) Act 2009 extends the rights provided under the predecessor Acts to include trademarks that are suggestive or based on geographical indications and to protect the use of such trademarks in connection with services.
Protection of Handloom Industry in India
In the early 1990s, there were about 1,000 handloom weavers in India. In 2002, however, only around 30 handlooms remained. Various stakeholders have been concerted efforts to save the handloom industry in India. The main reasons for its decline are:
- A decline in demand for traditional Indian clothing due to the growing popularity of western clothing styles and increased imports;
- The increasing use of synthetic materials instead of cotton; and
- The lack of funds and skills required to run a handloom business.
Several laws and legislations govern India’s fashion industry (including handloom). The Factories Act of 1948 regulates the working conditions in factories producing clothing and other textile products. The Apparel Export Promotion Council of India regulates exports of apparel and textiles from India.
Laws and Legislations Applicable to the Fashion Industry in India
Detailed below are some crucial laws and regulations pertinent to the Indian fashion industry. This information is provided for individuals currently involved in the industry or contemplating entry, offering comprehensive insights into the legal framework that governs this dynamic sector.
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Intellectual Property Laws
Intellectual property laws play a pivotal role in safeguarding various facets of the fashion industry in India. The protection of original works by fashion designers is enshrined in the Copyright Act of 1957, ensuring that their unique creations receive due recognition through copyright registration. To combat design piracy, the Design Act of 2000 serves as a shield, offering legal protection to the intricate designs crafted by fashion designers.
Trademark registration under the Trademark Act of 1999 is paramount for brand recognition, securing exclusive rights for logos and brand names within the competitive landscape of the fashion industry. Geographical indications, such as Banarasi silk sarees or Rajasthani choli, find protection under the GI Act of 2000, preventing unauthorised use that could dilute the association of products with specific regions.
Innovative designs in the fashion realm benefit from the Patent Act of 1970, which facilitates the protection of these novel creations through patent registration. This comprehensive legal framework underscores the importance of intellectual property laws in fostering creativity, innovation, and the overall growth of the fashion industry in India.
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Labour Laws
With the burgeoning growth of the fashion industry in India, numerous fashion houses and companies have emerged, employing a substantial workforce. In recognition of the rights and well-being of these workers, labour laws have been instituted. Several crucial labour laws are applicable to the fashion industry, including:
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- Payment of Wages Act (1936): Regulating the payment of wages to specific classes of employed individuals, this act ensures fair compensation for the workforce.
- Indian Industrial Disputes Act (1947): Governing disputes between employers and employees, this act facilitates the resolution of conflicts within the dynamic environment of the fashion industry.
- Minimum Wages Act (1948): Focused on regulating minimum wages, this act safeguards the financial interests of employees, promoting fair remuneration standards.
- Maternity Benefits Act (1961): Protecting the rights of pregnant women in the workforce, this act grants paid leaves during and after pregnancy, ensuring the well-being of female employees.
- Payments of Gratuity Act (1972): Offering benefits to employees with continuous service of one or more years, this act provides a framework for recognising and rewarding long-term commitment.
- Sexual Harassment of Women at Workplace Act (2013): Extending its application to the fashion industry, this act addresses and prevents sexual harassment, fostering a safe and inclusive work environment.
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Taxation Laws
Similar to other sectors, the Indian fashion industry operates within the framework of taxation laws. There are two primary laws governing taxation in the country: the Goods and Services Tax (GST) Act of 2017 and the Income Tax Act of 1961. Adherence to these laws is imperative, as non-compliance may result in substantial fines and penalties, which can adversely affect business operations.
Under the GST laws, one crucial compliance requirement is GST registration. Businesses falling within the specified criteria must ensure registration to avail various benefits associated with it. This proactive step not only ensures legal conformity but also enables businesses in the fashion industry to capitalise on the advantages offered by GST registration, contributing to their overall financial well-being and operational efficiency. Understanding and adhering to these taxation laws are vital aspects of responsible and sustainable business management in the dynamic landscape of the Indian fashion industry.
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Advertisement Laws
In the dynamic world of the Indian fashion industry, advertising is indispensable for both established giants and emerging brands. However, it comes with the responsibility of compliance with pertinent laws and regulations. Regardless of the brand’s stature, adherence to industry-specific legislation is imperative.
Advertisement laws emphasise that promotional content must steer clear of misleading or fraudulent information. Ensuring transparency, advertisements must accurately represent the goods or services they promote. Whether a renowned entity or a nascent brand, maintaining ethical advertising practices not only upholds legal standards but also fosters trust among consumers. Navigating the vibrant landscape of the fashion industry requires a delicate balance between creativity and adherence to advertising laws, ultimately contributing to sustained brand credibility and consumer loyalty.
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Company Laws
Establishing any business entity within the Indian fashion industry necessitates adherence to company laws. Governed by the Companies Act of 2013, this legislation offers a variety of entity options for those entering the sector. Choices include a Private Limited Company, One Person Company, and Limited Liability Partnership (LLP). Once the entity is incorporated, strict compliance with the rules and regulations outlined in company laws becomes obligatory.
Applicable laws cover various aspects, including governance structures, financial reporting, and shareholder rights. It is paramount for business owners to familiarise themselves with these legal provisions to ensure smooth operations and mitigate legal risks. Noncompliance can result in substantial fines and penalties. Therefore, strict adherence to company laws is not just a legal requirement but also a vital step in safeguarding the business’s integrity and longevity within the competitive landscape of the fashion industry in India.
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Environment Laws
In the ever-evolving landscape of industry regulations, environmental laws stand as a critical pillar for businesses, including the dynamic world of the Indian fashion industry. Non-compliance with these environmental regulations can lead to severe fines and penalties, posing a significant threat to the sustainability of any business. The fashion industry is no exception; it is imperative for entities within this sector to align with environmental laws to mitigate legal risks and contribute to a sustainable and eco-friendly business environment.
These laws encompass a spectrum of considerations, from waste management to resource consumption, aiming to minimise the ecological footprint of businesses. The fashion industry, with its intricate supply chains and diverse processes, must navigate these regulations diligently. By proactively adhering to environmental laws, businesses not only fulfil legal obligations but also play a pivotal role in fostering a conscientious and responsible approach to sustainability within the broader framework of the Indian fashion industry.
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Criminal Laws
In the intricate tapestry of legal frameworks shaping business conduct, criminal laws emerge as a pivotal element, holding significance for various industries, including the vibrant landscape of the Indian fashion sector. Non-compliance with criminal laws can have far-reaching consequences, exposing businesses to legal repercussions that jeopardise their existence. It is imperative for entities within the fashion industry to align with criminal laws, recognising the role they play in upholding ethical standards and societal well-being.
Criminal laws encompass a broad spectrum of considerations, ranging from fraud and intellectual property theft to labour violations and product safety. Navigating this complex legal terrain requires diligence and adherence to prescribed regulations. In the fashion industry, where creativity intersects with commerce, avoiding criminal infractions becomes paramount. By proactively ensuring compliance with criminal laws, businesses not only safeguard their integrity but also contribute to a legal and ethical foundation that promotes responsible conduct within the dynamic framework of the Indian fashion industry.
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Consumer Protection Laws
Safeguarding consumer rights is paramount across diverse industries, and in India, the Consumer Protection Act of 2019 serves as the governing law for this purpose. This legislation acts as a formidable shield against fraudulent practices targeting consumers. In the event of any infringement of consumer rights, individuals have the recourse to file complaints under this comprehensive law.
The Consumer Protection Act establishes three key authorities to address grievances and ensure justice:
- District Consumer Forum: This local forum serves as the initial point of recourse for consumers, allowing them to address concerns at the district level.
- State Consumer Forum: Operating at the state level, this forum handles cases that extend beyond the jurisdiction of the district level, providing consumers with a broader platform for resolution.
- National Consumer Forum: At the national level, this forum serves as the apex authority, dealing with complex cases and offering a final avenue for consumers seeking redressal on a national scale.
Effect of Make in India Policy on Textile Industry
India is one of the largest textile-producing countries in the world. The Indian Textile Industry is worth approximately $30 billion and employs around 1.25 million people. India has ambitious plans to become a global textile leader through initiatives like ‘Make In India’.
The Make In India policy, launched by Prime Minister Narendra Modi in October 2016, aims to attract foreign investment and boost domestic production in a number of sectors, including textiles. The policy has positively affected the textile industry as it has led to increased demand for Indian products and reduced prices of imported fabrics.
The Make In India policy has also facilitated the growth of the textile sector as it has created jobs in areas such as design, manufacturing, and marketing. As a result, the textile industry is expected to grow rapidly over the next few years.
However, there are some limitations to the success of the Make In India policy. For example, there are few domestic producers of synthetic textiles, which makes it difficult for them to compete with imports. Moreover, the high cost of inputs, such as yarn and chemicals, restricts the expansion of small-scale businesses in the sector.
What Are the Efforts to Develop Global Fashion Brands?
The development of global fashion brands demands a convergence of innovative design, a seamless supply chain, effective retail and distribution control, and an unwavering commitment to quality and image. While renowned brands like Tommy Hilfiger, Gucci, Zara, Armani, Versace, and Ralph Lauren have successfully penetrated the Western markets, India’s journey in this regard has faced challenges.
One key hurdle hindering India’s success lies in its relative isolation within the global fashion ecosystem. To establish a formidable position, stakeholders, including designers, exporters, textile players, retail chains, and the government, must collaborate cohesively. Collective efforts are crucial for shaping the future of Indian fashion on the global stage.
Efforts to cultivate global fashion brands can be facilitated through collaboration with various agencies and industry associations. However, these endeavours require substantial resources and a strategic focus on building a comprehensive global image for Indian fashion, rather than merely promoting specific brands or textile segments in isolation. The synergy of stakeholders and concerted efforts towards a unified global identity will play a pivotal role in positioning Indian fashion on the international map in the years to come.
Challenges Faced by the Textile Industry by the Make in India Initiative
In India, the textile and apparel industry is a key sector contributing significantly to the country’s GDP. However, the sector faces a number of challenges, including:
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Low Productivity Levels:
This is largely because of low production efficiency and a lack of skilled workers. In addition, there is a lack of infrastructure, such as textiles mills and spinning mills. As a result, textile and apparel manufacturers struggle to produce high-quality products at competitive prices.
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Limited Access to Imported Materials:
The limited access to imported materials has also been a major challenge for Indian textile and apparel manufacturers. This is because most of the materials used in these industries are sourced from abroad. In addition, tariffs on these items are high, which makes it difficult for manufacturers to compete with international brands.
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High Labor Costs
One of the main reasons why Indian textiles and apparel manufacturers have struggled to compete with international brands is their high labour costs. This is because these industries rely on a large number of low-paid workers who are often subject to exploitation.
Government Initiative to Improve the Textile Sector in India
India is a country with a rich cultural heritage and a long textiles tradition. Over the years, India has become an important player in the global textile industry. However, the sector faces several challenges, including high labour costs, low productivity, and a lack of infrastructure. In response to these challenges, the Indian government has launched several initiatives to improve the textile sector. These initiatives include establishing new textile colleges and institutes, developing new technologies, and increasing investment in the sector.
Despite these efforts, the textile industry remains relatively underdeveloped in India. This is largely due to high labour costs and a lack of skilled workers. As a result, many manufacturers rely on low-cost inputs such as cotton imported from China. To address these issues, the Indian government has launched several initiatives to improve the quality of Indian textiles and increase their competitiveness in the global market. These initiatives include improving access to financing and training for textile entrepreneurs, creating new marketing channels, and increasing research and development in the sector. In addition, the government is also working to create better infrastructure for the textile industry, such as increased production facilities and better distribution networks.
FAQs
What is the Future of Indian Fashion in Coming Years?
As per a report, the Indian fashion market anticipates achieving a compound annual growth rate (CAGR) between 11-12%, aiming to reach $115-125 billion by 2025. Nevertheless, the industry encounters a landscape marked by heightened competition, evolving consumer choices, and technological disruptions, presenting a dynamic mix of both opportunities and challenges.
How big is the fashion design Industry in India?
In 2022, the Indian textile and apparel market is approximated to be $165 billion, comprising a domestic market share of $125 billion and exports contributing $40 billion. The industry's market size is expected to experience a Compound Annual Growth Rate (CAGR) of 10%, projecting an expansion to $350 billion by the year 2030.
What are the Clothing Laws in India?
Citizens in India possess the freedom to choose and wear attire according to their preferences. The Indian Constitution guarantees individuals the right to dress as they find comfortable, affirming the liberty of the citizens in their clothing choices.
What are the laws for the garment industry?
Various laws and regulations govern India's fashion sector, including handloom. The Factories Act of 1948 supervises the working conditions within factories involved in manufacturing clothing and textile products. Furthermore, the Apparel Export Promotion Council of India assumes a regulatory role in monitoring export activities associated with apparel and textiles originating from India.
What is the law for fashion design?
The Copyright Act of 1957 protects the rights of creators by safeguarding original and creative works. Any work displaying originality and creativity is covered by this act. Specifically, Section 2(c) of the Copyright Act of 1957 ensures that these creations are shielded from exploitation or unauthorised duplication.
