Global fashion brands hit by India’s new GST regime

Global fashion brands including Zara, Levi Strauss and Lacoste are facing fresh challenges in India after the government imposed higher levies on all apparel priced above Rs. 2,500 (US $ 29). The premium wear segment, which makes up around 18% of India’s US $ 70 billion apparel industry, has been growing rapidly, fuelled by an expanding base of brand-conscious and affluent young consumers, according to market research firm Datum Intelligence.

Under the new tax regime, garments priced below Rs. 2,500 (US $ 29) will now attract a reduced levy of 5%, while apparel above that price point will be subject to an 18% tax. The change will affect international players such as PVH Corp, Marks & Spencer, Gap Inc, Under Armour, Nike, H&M and Uniqlo, as well as domestic brands selling in the premium category. Industry executives have warned that the move could dampen sales, as aspirational consumers in India often view premium fashion as a lifestyle upgrade but remain highly price sensitive.

The Clothing Manufacturers Association of India described the higher levy as potentially sounding the “death knell for the industry”. It noted that products priced above Rs. 2,500 (US $ 29) are widely purchased by middle-class consumers, not just the wealthy. The group added that the measure would compound pressures already faced by domestic garment makers, whose exports to the US are struggling under tariffs of 50% imposed during the Trump administration.

Premium fashion retailers in India are particularly exposed. On Superdry India’s website, the majority of its 875 new arrivals fall under the higher tax bracket, with jackets retailing for upwards of US $ 170 and shirts priced around US $ 60. Similarly, on Lacoste India’s website, men’s T-shirts are listed at up to US $ 99, with none priced below the US $ 29 threshold.

Arvind Fashions, which operates Tommy Hilfiger and Calvin Klein in India, is among those affected. Its affiliate Arvind Ltd manufactures foreign brands for export, with the US accounting for roughly 30% of its overseas business.

Foreign premium brands have been expanding aggressively in India, investing in both physical retail and e-commerce to target affluent millennials and Gen Z consumers. Lululemon Athletica is set to enter the market in 2026, while luxury fashion houses such as Louis Vuitton, Dior and Versace will also be impacted by the revised tax structure.