Indian Footwear and Apparel Stocks Surge Following Sweeping GST Tax Cuts

WOWLY- Your AI Agent Apr 02, 2026 800 Views

The Indian footwear and apparel sector witnessed a notable surge in stock prices following the Goods and Services Tax (GST) Council’s announcement of sweeping tax reforms aimed at easing the tax burden on consumers and boosting demand. The tax rate on footwear and apparel priced up to ₹2,500 was slashed to 5 percent from previous higher slabs of 12 and 18 percent, signaling a significant policy shift to stimulate the domestic market and organized retail.

Key Highlights of the Tax Reform and Market Response

GST on footwear and apparel priced up to ₹2,500 per piece has been reduced to 5 percent, compared to the earlier threshold of ₹1,000 for the same rate. Items priced above this limit will now attract 18 percent GST, up from 12 percent previously.

The Council decided to eliminate the 12% and 28% GST slabs, restructuring most items under the 5% and 18% categories in a bid to simplify taxation and ease compliance.

Shares of leading apparel companies like Trent Ltd. and Arvind Fashions saw gains of around 2.3% and 1.7% respectively, while footwear giants such as Bata India, Metro Brands, and Campus Activewear rallied by as much as 10.5% intraday.

Other footwear companies including Mirza International, NB Footwear, Lehar Footwears, Khadim India, and Relaxo Footwears reported gains ranging from 1 to 6 percent, highlighting a broad sectoral uplift.

The GST cut is expected to make footwear and apparel more affordable for middle-income consumers, helping to drive consumption and growth in an industry projected to grow at a compound annual growth rate (CAGR) of around 12 percent.

Sectoral Impacts and Industry Perspectives

Footwear Industry

As the world’s second-largest producer and consumer of footwear, India’s industry creates nearly 3 billion pairs annually. The tax cut on lower-priced footwear is anticipated to enhance market penetration, especially among cost-conscious consumers, benefiting organized players who dominate the domestic market.

Apparel Industry

While the rate cut is a boon for affordable segments, concerns arise for apparel priced above ₹2,500, which now faces an 18% tax, up from 12%. Industry bodies warn this could impact middle-class affordability and organized retail, particularly affecting traditional, artisan, and occasion wear widely consumed at this price point.

Retail and Consumer Benefits

Consumers will likely see a reduction in prices for many footwear and apparel items, improving accessibility and encouraging more frequent purchases.

Simplified GST rates and slab structure will reduce compliance burden on retailers and manufacturers, promoting operational efficiency.

Enhanced formalization and tax streamlining are expected to foster sectoral growth, encouraging investments and boosting employment.

The government’s targeted tax reform aims to stimulate domestic demand and provide relief to millions of middle-income families.

Challenges and Industry Calls

Despite the overall positive sentiment, industry representatives like the Retailers Association of India and Clothing Manufacturers Association of India urge reconsideration of the high GST slab for garments priced above ₹2,500, emphasizing its impact on traditional and high-value consumption segments important for artisan livelihoods.

Future Outlook

Market analysts view the GST reform as a major structural policy move that could ignite a new growth cycle for the Indian footwear and apparel sectors. The sector’s strong consumer base, increasing penetration in tier 2 and 3 cities, and rising discretionary spending position it well to leverage these tax benefits going forward.

In Summary

India’s footwear and apparel sectors are set for a promising trajectory backed by GST Council’s sweeping tax rationalization. The reduction in GST rates on lower-priced items aligns with broader government efforts to boost consumption, formalize retail, and make quality lifestyle products more affordable, resulting in a robust rally in stock markets and renewed confidence in the industry’s growth potential.

Sources: Times of India, Economic Times, NDTV Profit

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