Several international clothing brands are planning to increase their retail prices in India due to the depreciation of the Indian rupee.
“Many international brands/retailers in India like Debenhams, Next, Diesel, Puma, etc. import a large part of their garments, and the depreciation of rupee has increased the import costs by up to 10-15 percent. Hence, many global brands/retailers are planning to pass on this cost to the consumer,” Mr. Amit Gugnani, Senior Vice President, Technopak Advisors, told fibre2fashion.
“Most of the international garment companies already operate on tight margins in India after taking into consideration duties, rentals and low volumes, so they have to cover the impact of dollar appreciation only by increasing prices,” adds Mr. Harminder Sahni, MD, Wazir Advisors.
The rupee has fallen by nearly 15 percent in the past three months and it touched a record low of Rs. 56.55 to the dollar on June 21, surpassing its previous low of 56.52.
Suggesting a possible solution for the global brands, Mr. Gugnani says, “In the longer term, brands/retailers need to start looking at domestic market for sourcing their garments/raw materials to negate the effect of exchange rate fluctuations.”
However, according to Mr. Sahni, “Most of the brands do not have sufficient volume to justify local sourcing and also the competence of local vendors may not be up to the mark.”
Most brands had increased their prices last year due to levy of excise duty on branded garments. However, this year excise duty impact on brands has been reduced and also cotton prices have declined substantially.
“The global apparel brands would have also gained from the easing of excise duty and decline in cotton prices,” avers Mr. Gugnani.
“In the current economic scenario, any increase in prices would also affect the sales volumes, which brands need not risk for the long term play,” he opines.
Fibre2fashion News Desk - India