GST hike on clothes hits Deepavali sales
This Deepavali, sales of ethnic and festive wear dropped by 15% after the GST on readymade garments over ₹2,500 jumped from 12% to 18%.
Even branded clothes in the ₹2,500-₹7,000 range saw a noticeable dip.
The tax hike has made shopping for festive outfits more expensive just as the celebrations kicked off.
Shift to cheaper garments
With higher taxes on pricier clothes, many people are now choosing garments under ₹2,500—which still carry a low 5% GST.
This shift is especially clear in ethnic wear, which makes up about a quarter of India's massive apparel market.
Sarees and textiles remain at the lower tax rate too.
Middle-class buyers feel the pinch
Middle-class buyers—who usually splurge on wedding and festival outfits—are increasingly picking cheaper options to avoid extra costs.
The new rules have pushed many to rethink their shopping habits this season.
Industry calls for uniform tax rate
While input costs are down thanks to reduced GST on manmade fibers and yarns (now just 5%), that benefit doesn't reach shoppers buying mid-range or premium clothes stuck at an 18% tax.
Industry groups are still urging for one simple rate across all garment categories to keep things fair and boost growth.