Uncertainty surrounding the Goods and Services Tax (GST) rate rationalisation has slowed purchases across India’s fashion and footwear market, with several retailers reporting softer demand and revenue declines in the September quarter. Companies said that consumers and distributors held back spending in anticipation of lower tax rates, contributing to an extended period of muted sales.
Retailers Face Delayed Buying Amid Prolonged Transition Window
Bata India Ltd, the country’s largest listed footwear retailer, was among the hardest hit. The company’s management said buying activity stalled after the GST Council announced a shift to two tax slabs on 18 August, with the revised rates taking effect only on 22 September.
“The long gap between the announcement and implementation created hesitation in the market,” said Amit Aggarwal, Bata India’s chief financial officer. Channel partners chose to wait out the transition to avoid potential input tax credit mismatches, he added. To counter the slowdown, Bata cut prices early and rolled out incentive-led schemes, passing on the lower GST rates from the first week of September despite the margin pressure.
Even with these measures, disruptions took a toll. Bata’s September-quarter revenue slipped 4.2% year-on-year to ₹801.33 crore, and net profit declined sharply from ₹51.97 crore to ₹13.89 crore. Aggarwal said the company would have posted at least flat revenue growth without the transition-related delay.
GST Cuts Offer Marginal Relief, But Demand Weak in Key Segments
Under the new structure, GST on footwear priced up to ₹2,500 dropped from 12% to 5%. Apparel categories too were streamlined into two slabs—5% and 18%—with the price threshold for the lower rate rising from ₹1,000 to ₹2,500. While this made budget clothing cheaper, garments above ₹2,500 now attract an 18% tax instead of 12%, affecting mid-premium and festive wear.
Industry analysts say the impact of GST is far from uniform. According to Satish Meena, founder of Datum Intelligence, the benefits accrued to only selective portfolios.
“Low-priced footwear hasn’t bounced back because the challenge is weak demand, not taxation,” Meena said. He added that brands such as Metro and Pantaloons were gaining traction due to stronger consumer relevance rather than the GST tweaks alone.
Khadim India also saw its September-quarter revenue drop to ₹101 crore from ₹109 crore a year earlier. While its premium line, British Walkers, grew in double digits and entry-level products under ₹500 recovered, mid-range styles remained under strain. The company expects the GST reduction to gradually bridge the gap between organised and unorganised players.
V-Mart Retail reported similar trends. Its managing director and CEO, Lalit Agarwal, said the tax cut did not immediately lift lower-ticket categories, as consumer sentiment stayed subdued.
Trent Ltd, part of the Tata Group, cited weak demand, prolonged rains, and transitional issues during the GST shift as factors behind its low single-digit growth. A research note by Mirae Asset said rationalised GST rates should aid discretionary purchases in the coming months but cautioned that the muted revenue trajectory indicates a broader consumption slowdown.
Premium Retailers Largely Insulated; Demand Picks Up Post-GST Rollout
In contrast, premium-focused retailers reported steadier performance. Metro Brands CEO Nissan Joseph said customers intentionally postponed major purchases until after the GST rate cut, leading to a sharp rebound once the new rates came into force.
“We saw as much as an 11% reduction on footwear priced between ₹1,000 and ₹2,500, and around 6% for pairs under ₹1,000,” Joseph said, adding that almost 90% of its Walkway range and large portions of Metro and Mochi benefited. With demand normalising, the company also posted strong e-commerce growth and remains optimistic about the second half of the year.
Aditya Birla Fashion & Retail Ltd (ABFRL), which runs brands like Louis Philippe, Van Heusen, Pantaloons and several ethnic labels, did not experience the slowdown visible among its peers. Managing director Ashish Dikshit said demand was steady and broadly comparable with earlier quarters. The early onset of Durga Puja boosted footfall, particularly for the Pantaloons chain, which recorded 7% like-to-like growth. Youth-centric brand OWND! grew 43% year-on-year.
Dikshit said the higher 18% GST on items above ₹2,500 had limited behavioural impact at premium price points where customers are less likely to trade down.
Multiple Disruptions Cloud Festive Quarter; Outlook Remains Cautious
Analysts note that this year’s festive calendar itself fragmented demand. With Durga Puja spilling into the previous quarter and Diwali arriving earlier than usual, retailers said spending patterns became dispersed—a phenomenon many described as a “summer Diwali” effect.
Weather disruptions, including heavy rainfall in eastern states and cyclonic conditions in Tamil Nadu and Andhra Pradesh, further dampened footfall during key shopping days.
Economist Ritu Srivastava of K J Somaiya Institute of Management said that while GST cuts offered savings, retailers simultaneously scaled back discounts, neutralising much of the benefit for customers. She added that e-commerce has also shifted purchasing timelines, with more shoppers buying weeks in advance of festivals.
To clear unsold inventory, retailers were forced to introduce deeper markdowns unusually early, pressuring margins across the sector.
Looking ahead, analysts expect a modest recovery in the third quarter but warn that competitive intensity and the limited share of discretionary spending on fashion will cap growth.
“We don’t expect a dramatic turnaround,” said Karan Taurani of Elara Capital. “The impact of GST cuts will unfold gradually over the next year, but overall demand revival will be slow and steady, not sharp.”
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