The government’s recent GST cuts were expected to give a strong push to India’s apparel and footwear industry. However, data from the September quarter tells a different story. Despite lower GST rates on several categories, sales in both apparel and footwear continued to fall, signaling deeper challenges in consumer demand and retail sentiment.
This trend raises a key question: Why didn’t GST cuts translate into higher sales? Let’s break it down.
⭐ 1. The GST Relief: What Actually Changed?
The revised GST structure, effective from late September, reduced rates to 5% for apparel and footwear priced up to ₹2,500. This brought down the price of many popular mid-range items.
However, items above ₹2,500 now attract 18% GST, making premium clothing and footwear more expensive. The split created a mixed impact across price segments.
⭐ 2. Sales Still Dropped: Here’s Why
🔹 1. Consumers Delayed Purchases Before the Rate Cut
Many buyers waited for the new GST rates to kick in, leading to a sharp drop in sales during the early part of the quarter. This temporarily hit overall quarterly numbers.
🔹 2. Weak Discretionary Spending
High inflation, cautious household budgets, and muted festive sentiment affected spending on non-essential items like apparel and footwear.
🔹 3. Retailers Faced Inventory & Cash-Flow Issues
Retailers held stocks purchased under old GST rates, leading to:
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Blocked working capital
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Reduced margins
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Slower restocking cycles
This made it difficult to aggressively push promotions, even with lower GST.
🔹 4. Discounting Became Less Attractive
With GST cuts already lowering final prices, retailers reduced their own discount levels. But Indian buyers are highly discount-driven, especially online, which reduced the perceived value.
🔹 5. Premium Segment Hit Hard
Higher GST (18%) on items above ₹2,500 made premium/aspirational wear less attractive, leading to a sharper decline in these categories.
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⭐ 3. Category-Wise Impact
👗 Apparel
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Mass-market clothing saw only marginal improvement, nowhere near expectations.
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Mid-range items benefited slightly, but premium apparel slowed due to higher tax.
👟 Footwear
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Budget footwear remained under pressure as rural and semi-urban demand stayed weak.
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Footwear priced up to ₹2,500 gained a mild boost, but overall category sales still declined.
⭐ 4. Why the GST Cut Didn’t Work Immediately
GST cuts usually show benefits in the long term, not instantly. In this case:
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Market transition took time
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Retailers needed to clear old inventory
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Consumers first waited, then hesitated due to weak sentiment
This created a temporary dip that overshadowed the intended relief.
⭐ 5. What to Expect in the Next Quarters
Industry analysts believe the real benefits of GST rationalisation may start showing up in upcoming quarters as:
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Retailers adjust pricing
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Inventories normalize
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Festive demand stabilizes
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Consumers respond to lower prices in the 5% GST band
If economic conditions improve, apparel and footwear could see recovery, largely driven by mid-segment buyers.
⭐ Conclusion
Even though GST rates were slashed to make apparel and footwear more affordable, the September quarter clearly showed that tax cuts alone cannot revive consumption. Weak demand, retailer challenges, and category-specific pricing pressures all overshadowed the positive impact of the GST reduction.
The coming months will determine whether the reforms can drive sustained growth — or if the sector needs additional policy and market support.