New study finds brands refusing to adjust prices to reflect minimum wage increases

A new survey by Transform Trade has found that “unfair practices are rife in fashion businesses” when working with Indian garment manufacturers. Among the behaviours reported, the organisation said that it found evidence of brands refusing to raise prices in line with cost increases and demanding extra price reductions despite production being underway.

In a survey of 198 Indian garment manufacturers, 81 percent said brands from the US, UK and EU were not adjusting prices to accommodate increases to minimum wages. Further concern was shown towards the over 53 percent stating that brands were cancelling orders, while 50 percent had experienced brands making large orders to only then reduce their size, but keeping cost per item the same.

Over one third of surveyors, meanwhile, said they had seen delays to order payments of more than three months, while around 40 percent reported that brands had insisted on discounting after entering into a contract. An additional 17 percent said they had faced penalties for delays to orders that were caused by brands changing details after a contract was signed.

Despite this, almost all of the manufacturers surveyed had said they never initiated legal action when brands violated contracts, with costs, risk to reputation and loss of future orders cited as core reasons. Transform Trade thus said that “collective response is needed to address brand behaviour, at consumer market government level”.

Speaking on the survey, Hilary Marsh, garment policy advisor of the organisation, said: "Fashion companies need to be held to account for their harmful choices. Paying late, demanding discounts, last minute changes, and refusing to adjust for price and wage increases are direct causes of increased workloads, lay-offs, and reduction in pay for garment workers. This report is just another piece of evidence of these practices that rule the industry. A Fashion Watchdog would enforce fair business practices for the sector.”