Value fashion and footwear stocks jump as GST 2.0 cuts rates; premium brands under pressure
- 5th September 2025
- 05:00:00 PM
- 3 min read
Summary
GST 2.0 has tilted the retail sector in favour of value fashion and footwear. Apparel and shoes priced up to ₹2,500 will now be taxed at 5%, spurring rallies in Bata India, Trent, Metro Brands and ABFRL. Premium players like Vedant Fashion and Aditya Birla Lifestyle Brands slipped as items above ₹2,500 move to the 18% slab
Mumbai | September 5
India’s GST 2.0 reforms are set to change the landscape for the apparel and footwear industry, with value-focused brands rallying and premium players losing ground. The sweeping tax overhaul, effective from 22 September, has simplified slabs to just two rates — 5% and 18% — reshaping consumption trends across retail fashion.
Stocks react to GST 2.0
Investors quickly re-priced retail counters following the announcement. Bata India surged over 7%, Metro Brands jumped 5%, while Aditya Birla Fashion & Retail (ABFRL) and Arvind Fashions gained up to 2%. On the other hand, Vedant Fashions (Manyavar) dropped nearly 2%, and Aditya Birla Lifestyle Brands fell 0.7%.
The divergence reflects a clear split: companies serving mass-market consumers benefited from lower tax rates, while premium labels faced higher GST burdens.
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New GST rates for apparel
Under the revised structure:
- Apparel priced up to ₹2,500 will attract 5% GST (earlier 5% below ₹1,000 and 12% for ₹1,000–2,500).
- Apparel above ₹2,500 will now be taxed at 18% (up from 12%).
The move effectively subsidises value apparel while raising costs for premium consumption. Crucially, distinctions based on fabric type (natural vs synthetic) have been eliminated, making the system price-led and easier to navigate.
Footwear sector benefits
A similar trend played out in footwear:
- Footwear priced up to ₹2,500 will now face 5% GST (down from 12–18%).
- Footwear above ₹2,500 will continue under the 18% slab.
This triggered a sharp rally in affordable footwear counters. Bata India posted its strongest single-day gain in two years, while Metro Brands also advanced. In contrast, premium and athleisure names like Campus Activewear corrected by 1% as the tax structure offered no relief for higher price points.
Structural challenges persist
While GST cuts boost affordability, some value retailers continue to face internal headwinds. Relaxo Footwears has seen stagnant revenues in recent years, losing share to regional players. V-Mart Retail has struggled with post-acquisition integration, and despite benefiting from lower tax rates, its stock moved only marginally higher after the announcement.
In apparel, Trent Ltd presents a contrasting case with dual positioning. Its mass-market brand Zudio has expanded rapidly at a 42% CAGR over FY21–25, far outpacing its premium chain Westside. The new tax regime is expected to further accelerate Zudio’s growth trajectory.
Broader retail market impact
Since Prime Minister Narendra Modi’s Independence Day announcement hinting at GST 2.0, retail stocks have outperformed. Bata, Trent and ABFRL have risen 10–18%, compared with a flat Nifty 50. The final details, however, clarified the split: premium brands such as Vedant Fashion and Aditya Birla Lifestyle Brands face an 18% GST rate, while mass-market players benefit from the 5% slab.
Overall, GST 2.0 simplifies compliance by basing tax purely on price rather than fabric or material categories. Combined with faster registration and refund processes, the reforms are set to ease operations for retailers and improve affordability for consumers.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
