GST Relief for Footwear & Apparel – A Game Changer for Consumption

What's Happening?

On 3rd September 2025, the GST Council reportedly approved a reduction in GST for footwear and apparel priced up to ₹2,500, bringing the rate down to 5%, up from the previous threshold of just ₹1,000. Alongside this, the Council is simplifying the GST structure by eliminating the 12% and 28% slabs, consolidating most items into 5% and 18% categories.

Market Impact: What It Means for Consumers, Retailers & Investors

Consumer Spending Gets a Boost
Lower GST should translate into cheaper shoes and apparel, directly benefiting middle-income consumers—especially ahead of the festive season.
Retail & E-commerce Sectors Get a Lift
As affordability improves, expect stronger footfalls in brick-and-mortar stores and a spike in online demand for fashion & footwear.
Improved Margins for Domestic Brands
Companies like Bata and Metro Brands—with a large share of their products priced under ₹2,500—stand to gain from improved competitiveness and margins.
Wider Sentiment Boost for Consumer Industries
A broad-based relief across daily-use goods could lift retail sentiment, aiding sectoral leaders in FMCG, apparel, and consumer durables.
Rationing by Price Bands Could Hurt Premium Segment
While the tax cut helps lower-priced goods, there’s concern that raising GST on premium apparel (above ₹2,500) could dampen demand in that segment.

What This Means for the Indian Markets

Consumption Stocks: Expect a positive re-rating in mid-tier apparel and footwear companies.
Retail & Mall Space: Higher footfall and sales growth could support realty segments tied to fashion outlets.
GST Momentum Across Sectors: If similar cuts impact FMCG and durables, broader market sentiment could get a strong cyclical boost.

Bottom Line

This GST cut is a welcome move for budget-conscious consumers and mid-market retailers. It could revitalize demand just as the festive shopping season begins. While market sentiment is likely to improve for consumption-linked sectors, there is a caveat—premium segments may face headwinds if taxed more heavily.

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

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Our Recent FAQS

Frequently Asked Question &
Answers Here

What exactly changed?

GST on footwear and apparel priced up to ₹2,500 has been cut to 5%, raising the previous ₹1,000 threshold. The 12% and 28% slabs are being merged into two: 5% and 18%.

Who stands to benefit the most?

Consumers seeking affordable fashion. Brands like Bata and Metro also benefit, given their product mix falls largely under ₹2,500.

Could this move hurt anyone?

Premium apparel makers could face higher GST (likely 18%), which may weaken demand. The Clothing Manufacturers' Association has warned of adverse effects on artisans and middle-class consumers for higher-priced garments.

How will this impact consumption broadly?

By lowering prices on everyday wear, this move can spark festive demand, raise discretionary spend, and positively ripple across retail, real estate, and even consumer durables.

Is this part of a broader reform?

Yes—GST is being streamlined into two major slabs (5% essentials, 18% standard goods), plus 40% for luxury items. This is aimed at boosting consumption while trimming complexity.

What about market sentiment?

Positive—for mid-tier consumption sectors. Expect tailwinds in retail, footwear, and apparel stocks. However, sentiment will be mixed where higher tax slabs impact premium goods.