Apparel Brands Absorb GST Hike on Premium Products
With the GST rate hiked from 12 per cent to 18 per cent on apparel products priced above Rs.2,500, brands are either not hiking prices or absorbing part of this hike in a bid to fuel consumer demand during the festival season. At the same time, they have reduced prices by 6.25-7 per cent on apparel products priced up to Rs.2,500, which now attracts lower GST at 5 per cent from 12 per cent.
Akhil Jain, MD and CEO of Amar Jain Clothing, that owns brand Madame, told businessline that the company has passed on benefits of 7 per cent on clothing items that attract reduced 5 per cent GST rate. “We believe this will definitely provide impetus to demand traction during this festival season. For clothing items priced above Rs.2,500, which make up 20 per cent of our portfolio, we have not increased prices despite increase in GST and are absorbing the impact. We want to offer more value for money to consumers through this measure during this festival season,” he added.
Jain said the company is bullish on the festival season. “On the first day of Navratri we saw higher demand compared to what we saw on the first day of Navratri last year, although the period has kickstarted earlier than last year,” he added.
The last two years have been challenging for the apparel segment after the pent-up demand seen post Covid and players are now banking on strong demand recovery this festival season.
Harkirat Singh, MD, Aero Club, known for brands Woodland and Woods, said: “We have not hiked prices on products priced above Rs.2,500 that is attracting a higher GST rate. We have a large portfolio priced in this price range. We are still contemplating on this matter and figuring out future steps. We don’t want to disrupt the strong demand momentum seen during this period as nearly 60 per cent of the sales for us come during this period. At the same time, we have passed on benefits of reduced GST to 5 per cent wherever applicable.”
Ethnic brand BIBA is also absorbing the impact of higher GST. Siddharath Bindra, MD BIBA Fashion Ltd said, “At BIBA, our customers remain at the heart of every decision. In line with the current GST framework, we are passing on the reduced tax benefit to shoppers for garments priced under Rs.2,599.At the same time, even though the GST slab has increased from 12% to 18% for garments above this price point, which constitutes a significant part of our range as a premium brand, we have chosen to absorb this impact currently. This step ensures that the joy of celebration is not dampened and that our customers continue to enjoy the best of BIBA without compromise.”
Mixed impact
Arun AB, VP–EBOs at Libas, added: “GST 2.0 brings clarity and positivity for mass fashion, with garments under Rs.2,500 now at 5 per cent —a big win for everyday wear. However, the shift of premium categories like lehengas and bridal wear to 18 per cent from 12 per cent brings challenges, especially during the festive and wedding season. This mixed impact is being felt across the retail apparel sector. We are passing on 100 per cent the GST benefit wherever rates have dropped, while also absorbing part of the hike in categories like lehengas to ensure customers continue to see value.”
A store manager of another key international brand told businessline that prices have not been hiked on products that are now attracting higher GST.
