Apparel industry warns of growth hit as tax hikes target aspirational shoppers

The movement may affect more willingly eager medium -income consumers who buy more branded clothes.

Some retailers told Mint They will transfer higher GST rates to consumers, and others continue at lower prices until the festival season is over.

When it was announced late on Wednesday night on reviewed GST signs, the government increased the GST on GST and clothing accessories and exceeded sales value La2,500% lower per part from an earlier tax plate to 18%. This can affect the prices of denim, jackets, winter clothes and official ethnic or wedding clothes.

However, it is priced between a positive movement and GST rate in clothing. La1,000 and La2.500 decreases from 12% to 5%. Products priced for the shoe industry LaIt was placed 12% before 2,500% GST. Previously, 5% GST could be applied to priced shoes La1,000. A sales value exceeding shoes LaIt continues to attract 2,500 18% GST per double.

On Thursday, the retailer’s Association of India (RAI) said that all clothes and shoes should be taxed by 5%.

“Placing them to 18% GST sign, mid -class purchasing, organized retail and clothing sector, and weakening the organized retail and clothing sector, and wedding dresses, winter abrasion, trades making, festivals and traditional products, Ra said Rai categories, Rai.

Festival Waiting

A retailer from a clothing chain, Mint In the case of anonymity, he said he plans to protect his current prices until the festivals are finished. It takes more than 60% of its offline work from clothes La2,500.

“We don’t want to upset the price points before Diwali. There will be any changes or increase in prices after the festival season. In late September, we will consider other ways of managing costs such as lowering some of our in -store promotions.” He said.

However, he said the clothes market was priced. La2,000 and La2.499 will now receive a support.

“When it is offline, 60% of our business is over La2,500, which will be affected by the increase in GST rates, are already planning to increase our bids at the 2,500 sub -price point. In general, we see this as positive for a large part of the clothing market operating at lower price points. La2,000, “he said Mint.

Clothing retailers are emphasized due to lower margins due to many sales days and more competition than online players.

The largest segment in clothing is the mass market that makes up 60% of sales, followed by premium and luxury.

However, more consumers trade with branded clothes in big cities and small markets.

“Clothing and shoes, athleisure, forms, daily, low, jackets, jackets and wedding dresses are very diversified with new additions. Today, mid -level brand retail jackets and descends, priced sets priced La2,000 and La3,000, Ağ said Agility and CEO of Angilitas, a sportswear company, Abhishek Ganguly.

New consumers

“In the last few years, costs have increased in the last few years. As a result, brands do not have the ability to absorb these walks and will probably pass the higher GST to consumers who will affect the general demand,” he said.

Most retailers, GST cuts will generally help to increase consumer demand, he said.

The shares of leading Indian retail and fashion companies saw strong gains that reflect their positive investor feelings on September 4. Bata India Ltd increased by 6.77% La1.241.10. Metro Brands Ltd won 4.52%and ended the day La1,223.80, La1.170.90. Arvind Fashions Ltd rose by 2.21%. La542.10. Aditya Birla Fashion and Retail Ltd increased by 1.95%, while Vedant Fashions Ltd stock fell 1.9%.

Most retailers said that desirable consumers in medium -income brackets want to trade in better brands.

“It is a little wrong to say that the middle class and the ordinary man buy all the clothes below 2,500. La3,000 to La3,500 for the middle -class consumer, “the Indian Clothing Producers Association (CMAI) head mentor Rahul Mehta.

“We believe that the above work is a big segment. La2,500 that will affect general consumption. In addition to an effect on ethnic and festive wear and Woollens, “Mehta, families try to reduce the costs of Trousseau this year, the biggest impact in the wedding business, he added. Wedding clothes typically exceeds the wedding clothes. LaAuthorized, 10,000 for a single outfit with consumers.

Higher expenses

In the meantime, Mehta, the Association’s Legal Metrology Department and the Ministry of Consumer Affairs with the old stocks in contact with the liquidation, he added.

“Retailers and producers may be sitting in the 2-3-month inventory with the expectation of festival and subsequent wedding seasons. However, the rules of legal metrology do not allow new labels or labels to paste,” he said.

When GST was released for the first time in 2017, a window was given to clothing retailers to run pre -GST sales and liquidate the old inventory. Now, such a sales window does not appear. “The industry will need a big enough window to clean the inventory in such a sale.” He said.

Even this warned that smaller mother and pop boutiques and informal wedding clothes suppliers to move to the gray market and pointed out that the difference between 18% tax and organized and gray market prices may be sharper.

Others at the price points lower La2,500, GST reception in general will help optional expenditures, he said.

“ACE Turtle Group CEO, a global brand, including Lee, Wrangler and Dockers, said, Nitin Chhabra,” The clothing industry does not directly affect the field of clothing and the field we operate, but because of the reduced GST rates in other categories and services, consumers will be clearly positive for us, “he said.

Vaeshnavi K. contributed to the story