India’s organised apparel retail sector is set to keep growing this fiscal year, a new Crisil Ratings report says. The sector could add about 200 basis points – roughly a 2 % bump – in revenue, keeping the growth rate steady at 13‑14 % for the second straight year.
The change comes after the government flattened the GST on most clothing. Now, items priced under Rs 2,500 enjoy a single 5 % tax, instead of the old dual rates of 5 % on items under Rs 1,000 and 12 % on those between Rs 1,000 and Rs 2,500. This wider tax base is expected to lift demand for mid‑premium pieces, while fast‑fashion and lower‑priced categories continue to drive sales momentum.
Crisil reviewed 40 organised retailers and found that the fast‑fashion and mid‑premium range, which mostly stay below Rs 2,500, make up about 65 % of the sector’s revenue. A stronger performance in these segments is likely to offset the slow growth seen in the premium sector, which accounts for roughly 35 % of sales.
“We’re timing the GST cut with the festive season, so middle‑class spending should rise,” said Anuj Sethi, senior director at Crisil. Inflation is easing, food prices are falling, and brands can refresh their lines faster. All these factors give retailers a modest share‑of‑wallet advantage in discretionary categories, keeping revenue growth healthy.
The tax hike on higher‑priced apparel – from 12 % to 18 % for items above Rs 2,500 – has weighed on premium categories such as wedding wear, woollens, handlooms, and embroidered clothing. Poonam Upadhyay, director at Crisil, noted that lower cotton prices and a GST cut on synthetic fibres and yarn to 5 % should help reduce input costs that make up nearly two‑thirds of production expenses.
Overall, the report projects that India’s organised apparel retail sector will sustain a 13‑14 % growth rate this fiscal year, buoyed by the GST rationalisation, a strong fast‑fashion gap, and supportive macroeconomic conditions.
Source: ianslive
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