It was projected that the domestic fashion industry would grow to a level of Rs 500 crore in the next five years but the growth of the sector would be much more, it said in a paper on 'Indian Fashion Industry'.

The sector accounts for a meagre 0.2 per cent of the global designer wear market, which is worth Rs 162,900 crore and is growing at 9.5 per cent annually.

"The government should establish more fashion institutes across the country with R&D facilities in each state so that regional expertise is blended with international designs," Assocham President Venugopal Dhoot said.

The Indian apparel market, worth Rs 111,000 crore in March 2007, would touch Rs 1,30,000 crore next year, he said.

"There is need to groom designers by sponsoring exchange programmes, provide business incubation to upcoming designers and reward efforts through appropriate design awards," he added.