Will GST reforms boost organised apparel revenues by 200 bps?
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Synopsis
In an exciting development for the Indian apparel market, a recent report forecasts a significant revenue boost for the organised apparel retail sector this fiscal year. With GST reforms playing a vital role, this growth could reshape the market landscape. Read on to explore how these changes will impact demand and sales!
Key Takeaways
- Projected revenue growth of 200 bps for organised apparel.
- Maintained growth rate of 13-14 percent for two fiscal years.
- GST rate cut expected to boost mid-premium segment demand.
- Fast fashion continues to drive market momentum.
- Lower input costs from reduced GST on synthetic fibres.
New Delhi, Oct 20 (NationPress) The revenue of India's organised apparel retail sector is projected to increase by approximately 200 basis points this fiscal year, thanks to the recent GST rationalisation, according to a report released on Monday.
The organised apparel retail sector is anticipated to sustain a growth rate of 13–14 percent for the second consecutive fiscal year, as per insights from ratings agency Crisil Ratings.
The reduction in the GST rate for apparel priced under Rs 2,500 is expected to boost demand in the mid-premium segment, while the fast fashion or value segment will continue to sustain momentum, Crisil's analysis of 40 organised retailers indicates.
Although the GST relief is somewhat limited, it offers timely support to maintain growth, the ratings firm noted.
The introduction of a uniform 5 percent GST rate—as opposed to the previous dual structure of 5 percent for items below Rs 1,000 and 12 percent for those priced between Rs 1,000 and Rs 2,500—has expanded the consumption base, according to the report.
“The increase in the GST rate for apparel over Rs 2,500 from 12 percent to 18 percent has impacted premium categories, including wedding wear, woollens, handlooms, and embroidered clothing,” the firm pointed out.
The premium segment constitutes about 35 percent of organised apparel sales.
Crisil emphasized that since fast-fashion/value and mid-premium apparel, primarily priced below Rs 2,500, account for nearly 65 percent of the sector's revenue, stronger sales in these lower-priced items are likely to offset the sluggish growth in the higher-priced apparel segment.
“With the timing of the GST rate cut aligning with the festive season, we can expect demand to rise as middle-class spending increases,” stated Anuj Sethi, Senior Director at Crisil Ratings.
Additionally, modest inflation, declining food prices, and quicker fashion-refresh cycles will enable retailers to capture a slight share-of-wallet advantage in discretionary categories, fostering sustained sectoral revenue growth of 13-14 percent this fiscal year, Sethi added.
Poonam Upadhyay, Director at Crisil Ratings, mentioned that reduced cotton prices and the lowered GST on synthetic fibres and yarn to 5 percent will alleviate input costs, which make up nearly two-thirds of production expenses.
Point of View
I believe these findings from Crisil Ratings present a balanced view of the evolving landscape of India's apparel sector. The GST reforms, while presenting challenges for higher-priced items, also open up opportunities for growth in the mid-premium and fast fashion segments, which are crucial for driving overall revenues.
NationPress
20/10/2025
Frequently Asked Questions
What is the expected revenue growth for India's organised apparel sector?
The revenue is expected to grow by approximately 200 basis points this fiscal year.
How will GST reforms impact consumer demand?
The GST rate cut on apparel priced below Rs 2,500 is anticipated to boost demand, particularly in the mid-premium segment.
What is the growth rate forecast for the organised apparel sector?
The sector is projected to maintain a growth rate of 13–14 percent for the second consecutive fiscal year.
How does the uniform GST rate affect consumption?
The uniform 5 percent GST rate has widened the consumption base by simplifying the tax structure.
What are the expected benefits from lower cotton prices?
Lower cotton prices and reduced GST on synthetic fibres will ease input costs, benefiting production expenses.
