The 2025 GST reform lowered taxes on apparel priced up to Rs.2,500 to 5%, up from the earlier Rs. 1,000 threshold, while raising the tax on apparel priced above Rs. 2,500 to 18%, up from 12%. This tax realignment is expected to stimulate demand in Tier-2 and Tier-3 cities while pressing premium brands to rethink pricing and customer targeting. Indian domestic brands are leveraging the 5% GST slab under Rs. 2,500 to compete more aggressively in value and mid-premium segments during key shopping festivals.
- What changes in volume or sales mix have you observed since the GST revision?
- Have you implemented any specific pricing or marketing tactics to capture rising demand in Tier-2 and Tier-3 cities as a result?
- How do you see the market evolving in future as a result of the GST tax reforms?
- What impact have these GST-driven price sensitivities had on your inventory planning and discounting strategies?
Amar Nagaram
CEO and Founder, VIRGIO
The recent GST rationalization has led to a shift in our sales mix, allowing us to focus more on the mid-premium segment. With the GST rate on garments up to Rs. 2,500 reduced to 5%, we have observed a strong surge in purchasing volume within the Rs.1,500 to Rs. 2,499 price bracket. Our strategic response is to lean into the lower GST bracket by expanding our collection of high-quality, versatile essentials.
At VIRGIO, our core audience has traditionally been in metro cities, but we’re steadily expanding into Tier-2 markets as awareness around sustainable fashion grows. Our focus has been on curating collections suited to each market’s evolving taste.
The correction of the inverted duty structure and the uniform 5% GST on man-made fibres and yarn will significantly lower input costs and alleviate working capital pressures, boosting the entire domestic textile manufacturing value chain and strengthening India’s global export competitiveness.
We’ve chosen to pass the GST benefit directly to our customers. Even beyond the reform, we’ve been consciously working to bring more styles under the Rs. 2,500 price bracket – a segment that has proven to be both popular and strategic for us.
Shivang Chandna
Founder and Creative Director, Past Modern
Products under Rs. 2,500 price band have gained stronger traction across Tier-2 and Tier-3 cities. We’ve adjusted our pricing architecture to ensure our hero styles land just below key psychological thresholds— for example, designing collections that fit within the Rs. 1,199 –Rs. 2,899 spot.
This reform is giving domestic brands the leverage to compete with global fast-fashion players on price and relevance. The Indian market will likely split between “value-fashion for everyday India” and “cultural-luxury for the conscious buyer.”
We’ve become far sharper with our buy plans and continue to refine it. Instead of spreading production thin across price brackets, we now design around demand clusters — building more depth in fast-moving styles under Rs. 2,500, while keeping our premium, limited-run pieces intentionally curated.
Discounting for us has always been minimal because we’ve never believed in inflating prices only to strike them off later. Our approach has always been to price right from the start. That said, we do build in moments of excitement — a first purchase discount and periodic loyalty offers for our existing customers — allowing us to protect our margins while still rewarding our community.
Trisha Roy
Brand Manager, Ray-Ethnic
Following the GST revision, we’ve observed a clear shift in sales momentum towards the mid-premium segment, particularly within the Rs. 1,500 – Rs. 2,500 price range. This has led to improved sell-through rates in our retail stores as well as on our e-commerce platform, with noticeable traction coming from Tier-2 and Tier-3 towns.
Earlier, products such as coordinated sets (a set of three) priced around Rs. 20,000 were sold as a single SKU and attracted a higher GST rate. We have restructured these sets into independent pieces, each falling within the lower tax slab.
The GST realignment has encouraged us to adopt a more data-led approach to inventory and assortment planning, leveraging real-time insights from our POS systems and regional sales performance. Approximately 30% of our inventory underwent price optimisation, with reductions in the range of 8–12%. We avoid prolonged or aggressive markdowns, choosing instead short, strategic clearance windows to manage seasonal transitions and maintain brand equity. We’ve also streamlined inventory depth by aligning production with region-specific demand patterns and top performing silhouettes.
Abhishek Dua
Co-founder, Showroom B2B
The sales mix has shifted towards high-velocity, lower-margin products such as knits, kidswear and everyday essentials. Brands are also witnessing smaller, more frequent reorder cycles and leaner channel inventories.
Brands have re-engineered pricing to ensure key SKUs fall within the lower tax slab and tailored assortments to regional demand. Marketing and promotional budgets have shifted toward non-metro markets, focusing on regional campaigns, influencer tie-ups and retailer incentive programs. Operationally, brands are offering smaller lot sizes and flexible payment terms, helping local retailers manage working capital better. Analytics are increasingly being used to track SKU performance.
As consumer affordability improves and supply chains become more integrated, brands and sourcing partners that provide efficient, tech-enabled services will gain traction. At the same time, premium garments priced above Rs. 2,500 may face slower growth unless they enhance differentiation or absorb cost pressures. Over the next few years, the market is likely to shift towards shorter lead times, higher frequency re-orders, broader regional penetration and greater reliance on digital and organised sourcing platforms.
NEXT INDUSTRY VERDICT QUESTIONS
Major Indian marketplaces and apparel brands are accelerating efforts to offer ultra-fast fashion fulfilment (30-minute / sub-60-minute) or very short delivery windows via q-commerce. A few of these are menswear brands like Snitch and fast fashion brands like NEWME which are
launching 60-minute delivery services. Along with these, fashion delivery start-ups like Slikk and Zilo have raised US $ 10 million and US $ 4.5 million respectively. With this phase of growth:
- What role do you see ultrafast delivery playing in your brand’s overall e-commerce and customer experience strategy?
- Do you view partnerships with existing q-commerce platforms as more viable than developing in-house rapid delivery models? Why?
- What preconditions — in terms of logistics, demand density or platform partnerships — would need to be in place for your brand to consider q-commerce?
- Are you exploring intermediate models such as same-day or next-day delivery as a step towards faster fulfilment?
