By Praveen Paramasivam
(Reuters) -Raymond Lifestyle plans to reduce prices on select apparel items, an executive said on Thursday, making the suitmaker one of the first companies to respond to the Indian government’s move to cut consumption tax.
The biggest tax code restructuring in eight years by Prime Minister Narendra Modi’s government – made after U.S. President Donald Trump imposed punishing tariffs on imports from India – lowers the goods and services tax on clothing costing less than 2,500 rupees to 5%.
Before the change, apparel that retailed at 1,000 rupees and above attracted 12% GST.
“Immediately from September 22, we will pass on (the tax benefits to consumers),” Raymond Group CFO Amit Agarwal told Reuters, adding that roughly two-thirds of Raymond’s apparel was priced below 2,500 rupees.
Raymond also plans to lower the prices of items priced just above 2,500 rupees to bring them under the reduced tax bracket.
The branded apparel business accounts for a quarter of Raymond Lifestyle’s revenue.
Industry watchers and corporate India executives expect prices on everything from small cars to everyday essentials to be slashed following the revision.
Agarwal, however, downplayed revenue concerns and said increased volumes would counter price cuts.
Raymond’s website shows many of its formal shirts are available at under 1,000 rupees, with only a fraction of its nearly 1,200 styles priced above 2,500 rupees. All blazers and jackets, however, are priced above 2,500 rupees.
Customers looking to buy blazers and jackets do not mind the price tags, Agarwal said.
In contrast, premium global apparel brands such as Lacoste and Superdry will be hit by the tax changes, as most of their offerings, including t-shirts, are priced above 2,500 rupees.
($1 = 87.5060 Indian rupees)
(Reporting by Praveen Paramasivam in Chennai; Editing by Pooja Desai)
