India’s overhaul of consumer tax stands to make everything from soaps to luxury SUVs cheaper, but global fashion brands such as Zara, Levi Strauss and Lacoste have been spooked by higher levies on all apparel priced at more than ₹2,500 ($29).
The premium wear segment accounts for about 18 per cent of an apparel industry worth $70 billion, says Datum Intelligence, spurred by a growing number of nouveau riche and brand-conscious youngsters in India.
The biggest tax reform in eight years cuts levies to 5 per cent on garments costing less than ₹2,500 ($29), but items priced above that figure now face a higher levy of 18 per cent.
That will pile pressure on the likes of PVH Corp, Marks & Spencer, Gap Inc, Under Armour, Nike, H&M and Uniqlo, as well as Zara, Levi Strauss and Lacoste.
“Retail works on wafer-thin margins, and overheads like rents are extremely high”, said the chief executive of a foreign brand operating in India. The official added, “This is not a luxury. The ₹2,500 price point is basic now.”
Industry lobby CMAI coined the move a ‘death knell for the industry’.
On Superdry India’s site, most of the 875 new arrivals fall into the 18 per cent slab, with jackets upwards of $170 and shirts around $60. On Lacoste India’s site, men’s T-shirts reach $99, with none below $29. The higher rate applies from September 22.
Export-focused Indian manufacturers face a double squeeze: weaker domestic demand and President Donald Trump’s 50 per cent tariffs on US shipments. Arvind Fashions runs Tommy Hilfiger and Calvin Klein in India, while affiliate Arvind Ltd exports foreign brands, with the United States roughly 30 per cent of its market.
