With rates rationalised and inverted duty structures corrected, apparel and footwear players eye stronger demand and sharper pricing
From clothing racks to shoe shelves, India’s textile and footwear industries are set to feel the ripple effects of Goods and Services Tax (GST) reforms. The move to standardise rates at 5 per cent for most inputs and intermediate goods in the textile sector is aimed at resolving long-standing issues like the inverted duty structure. Footwear priced up to Rs 2,500 per pair now attracts 5 per cent GST, directly benefiting the consumer.
The GST rationalisation in textiles is likely to remove structural anomalies, reduce costs, boost demand, support exports, and sustain jobs. By reducing cost distortions, it will strengthen the entire textile value chain from fibre to garment. It will also correct anomalies at the fibre stage, reducing costs at the yarn/fabric stage, boosting garment affordability, reviving demand at the retail stage, and enhancing export competitiveness.
“By addressing the inverted duty structure and rationalising rates, the council has provided the much-needed push to improve industry efficiency. This will not only ease working capital pressure for manufacturers but also create room for more competitive pricing in the market,” highlighted Shivendra Nigam, Chief Financial Officer (CFO), Cantabil Retail India.
Passing On The Benefits
The consumers are set to gain the most as these rate rationalisations will significantly lower the cost across the Man-made Fibre (MMF) and technical textiles value chain, enhance efficiency and export competitiveness. The GST reduction will now allow the companies to strike a healthier balance between passing benefits to consumers and strengthening their margins. In footwear, this move will make quality footwear more accessible for the common man and the middle class while also giving a strong boost to domestic demand.
“A portion of the relief will be directed towards making our products even more competitively priced, ensuring affordability for our customers, while the remaining benefit will help us offset operational costs and reinvest in scaling the business. Broadly, we anticipate allocating approximately 60 per cent towards consumer benefit and 40 per cent towards margin improvement,” explained Siddharth Dungarwal, Founder, Snitch.
The reset is not just confined to apparel, footwear is also stepping into a new cycle. From mass-market shoes to premium labels, footwear players are recalibrating strategies as GST tweaks shift affordability for consumers. A rationalised and uniform GST structure will bring much-needed clarity, transparency, and predictability to the industry, according to the industry players.
“For an industry that is highly labour-intensive and a vital part of India’s manufacturing economy, the reduction provides timely relief and helps organised players like us compete more effectively with unorganised markets. It also creates the opportunity to expand production, generate more jobs, and support India’s vision of inclusive growth,” noted Sachin Joseph, EVP, Marketing and IT at Paragon Footwear.
Demand Surge During Festive Season
With the festive season being one of the peak periods for apparel and footwear consumption in India, the companies are anticipating a strong demand surge across categories as consumers are likely to respond positively to more accessible price points. Snitch is confident of recording a growth of 35 to 40 per cent during this period compared to last year.
“With GST reforms aligning with the festive season, we expect a sharper uptick in demand as price relief and improved affordability coincide with peak consumer spending. This will likely accelerate the consumption cycle, especially in value and ethnic segments, and set a strong base for sustained momentum into the wedding and winter season,” stated Bhavay Pruthi, Vice President, Product Management and Ecommerce at Libas.
Cantabil is also looking to pass a significant part of this benefit to consumers through stable and accessible pricing as it anticipates a strong demand cycle in the coming months due to the timing of these reforms.
“The recent GST reforms are a welcome move for the overall industry and will play a crucial role in reviving trade sentiment. It is particularly encouraging for the footwear sector, as it paves the way for improved consumer sentiments and demand. At Relaxo, we look forward to a great festive season ahead,” said Ramesh Kumar Dua, Chairman and Managing Director, Relaxo Footwears.
Addressing The Grey Areas
“Businesses require immediate and clear guidance on how to manage inventory, adjust pricing, and handle input tax credits on goods purchased under the old tax regime. Any confusion could disrupt supply chains and hamper the positive impact of the reforms,” explained Dharmesh Dattani, CFO, Vishal Fabrics.
In the entire value chain from fibre to garment, garments above Rs 2,500 are the only products which are not at 5 per cent. The Clothing Manufacturers Association of India (CMAI) has requested the council to remove this anomaly, and either place all garments, irrespective of the price, at 5 per cent, or fix a more reasonable and realistic price level.
“We expect 30 to 40 per cent growth in luxury footwear sales post-implementation, driving significant expansion in our sneaker and streetwear categories. This is exactly the catalyst India’s fashion industry needed,” highlighted Devansh Jain Nawal, CEO & Co-founder, Culture Circle.
Industry players added that while the simplified tax structure aims to reduce the compliance burden, the government needs to ensure that the new system is easy for MSMEs to navigate. Issues like managing credit notes and reconciling high-volume, low-value transactions continue to pose challenges for many of these businesses.
“For years, varying tax rates across price points created confusion for both brands and consumers. A uniform structure improves transparency, reduces compliance friction, and enables fairer pricing without hidden distortions,” Ahmad Hushsham, Founder and Chief Executive Officer (CEO), Yoho.
“For too long, multiple tax slabs and varying interpretations created confusion for both businesses and consumers. With this step, Businesses & retailers will be able to operate with greater ease and efficiency, while customers will benefit from a simplified and more consistent pricing framework,” noted Tabby Bhatia, Founder, Brune & Bareskin.
As the reforms take root, the real test will lie in execution, ensuring that clarity, compliance, and consumer benefits move hand in hand. For textiles and footwear, sectors deeply tied to India’s growth and employment, a simplified GST structure could well become a stitch that binds and a step that carries India’s style economy forward.
