NEW DELHI: The government’s move to double customs duty on imported garments has unsettled global apparel brands as it will make their goods more expensive for Indian consumers.
From sportswear giant Adidas to Spanish fast fashion retailer Zara, global retailers import a sizeable chunk of their stocks to sell in India. Several brands TOI spoke to slammed the duty hike.
“Prices will increase by 4-6% and it could slow down investments in India by price-sensitive brands such as Hennes & Mauritz (H&M), which has been on expansion spree in the country,” said the CEO of a US-headquartered men’s apparel brand. Customs duty across categories, from simple tees and anoraks to brassieres and shorts, has been raised from 10% to 20%, as the government looks to boost local manufacturing. While it was heartening for domestic garment exporters, who said the local garment manufacturing industry was being impacted by a spurt in garment imports from countries such as China, Cambodia, Vietnam and Bangladesh, foreign players cried foul.
“This does not change anything in relation to local sourcing for international brands, if the government wants to boost domestic sourcing, they should rather focus on free trade agreements with the EU and US to make India a strong global sourcing hub,” said the India head of one of the world’s largest fast fashion retailers. “The increase in the duty structure only deters global investments into India.”
Foreign apparel brands operating in India’s highly competitive, price-sensitive market have been trying to bring their prices down. “For instance, a basic T-shirt, which is the cheapest item for any brand, is the entry point for a consumer,” said the CEO of a European menswear retailer. Others trying to make headway in the market such as Ed Hardy and Gap, which is being sold by Ahmedabad-based Arvind in India, have tried to localise manufacturing.