India Applied MRP on Imported Garments

The Indian Government has decided to apply the countervailing duty on imported garments on the maximum retail price (MRP) rather than on their declared value, that has pushed up their costs by around 15%.

The duty rejig, which came into effect on September 9, hit the USD2.165 billion  imported garments industry hard with companies unable to push up prices. Retails brands are forced to take a cut in margins, most of these firms are looking to increase local sourcing of their merchandise.

“We want to stay the accessible, affordable, mid-market international brand that we are perceived as, so we will have to absorb cost increases. We are keenly looking at shifting the product mix in favour of locally sourced materials,” said Nandini Sethuraman, marketing director, Marks & Spencer Reliance India.

The UK-based high street retailer has 14 stores in the country and imports around two-thirds of its apparel range, mainly from the UK, China and Turkey. As it rolls out its expansion, Marks & Spencer plans to ramp up the number of contract manufacturers in the country from about 50 currently.

The change in the duty structure, while not prompted by any malpractices by importers, will help protect domestic suppliers and apparel retailers.

“Although we source a majority of our products locally, it will limit us from bringing newer products into the country. We will have to either drop orders or take a hit on our margins,” said Andreas Gellner, MD of Adidas India.

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