India's Tax Overhaul: Affordable Essentials, Costly Fashion

India's ambitious tax restructuring aims to make daily essentials and luxury SUVs more affordable, but it's delivering a substantial blow to the global fashion industry operating in the region. Brands like Zara, Levi Strauss, and Lacoste face higher taxes on apparel priced above $29, a move threatening sales in a market attentive to price sensitivity.

With Prime Minister Narendra Modi's government slashing levies to just 5% on garments under 2,500 rupees but hiking it to 18% above this threshold, the premium fashion segment finds itself grappling with potential sales decline. Aspirational young consumers, viewing these fashion items as lifestyle upgrades, might pull back amid tightening budgets.

Adding pressure is the impact on domestic garment makers, already struggling against U.S. import tariffs. However, some sectors like SUVs have benefitted, with heavy cuts in their tax rates. As India implements this pivotal reform, the Fashion arena braces for a challenging landscape with significant implications for both domestic and international stakeholders.