Apparel and footwear stocks rally after GST rate cut

Most apparel and footwear stocks surged on Thursday after the Goods and Services Tax (GST) Council approved a significant tax rate cut. Chaired by Finance Minister Nirmala Sitharaman, the GST Council announced a reduction in the tax on apparel and footwear priced up to Rs 2,500 to 5 percent, down from the previous 12 percent and 18 percent slabs. This is a substantial increase from the prior threshold of Rs 1,000 for the same 5 percent tax rate.

The announcement, which was part of a broader tax cut on daily essentials, was met with a positive reaction from the market. Apparel stocks like Trent Ltd. and Arvind Fashion Ltd. led the rally, trading 2.30 percent and 1.70 percent higher, respectively. Other companies, including V2 Retail Ltd. and V Mart Ltd., also saw gains.

Footwear companies experienced a particularly strong rally, with Bata India, Metro Brands, and Campus Activewear surging by up to 10.5 percent in intraday trading. Other footwear companies, including Mirza International, N B Footwear, Lehar Footwears, Khadim India, and Relaxo Footwears, also advanced between 1 percent and 6 percent.

As the world's second-largest manufacturer and consumer of footwear, India's 17.9 billion dollars footwear industry, which produces nearly 3 billion pairs annually, is projected to grow at a 12 percent CAGR.