India Garment Manufacturers And Retailers Plan To Cut Prices By 15%

Even though India's overall inflation rate has risen steadily, India clothing shoppers can now see signs of some clothing prices easing.

India clothing manufacturers and retailers plan to cut their clothing prices by 10-15% next spring and summer, starting in spring and summer in February.

The reason for price cut is that sales are decreasing and raw material (cotton) prices are being adjusted.

Clothing manufacturers and retailers, such as Pantaloon retailers and shoppers, have stopped raising prices by 8 to 18% due to increased consumption tax and rising cotton prices.

Retail businesses also cut 2% net profits in the first quarter of 2011-12, due to a drop in sales growth in the same store after rising clothing prices and weak consumer demand.

In last year's budget, the government imposed a 10% consumption tax on brand clothing, forcing manufacturers and retailers to raise prices.

Similarly, cotton prices have dropped by nearly 50% in the past 8 months.

Cotton prices plummeted from 63000 rupees /candy to the current 39300 rupee /candy.

Rahul Mehta, President of the India Garment Manufacturers Association, said that the real price of clothing will fall in the spring and summer of 2012. From then on, garment manufacturers will consider the factors of falling prices of raw materials, and he expects prices to fall by 10%.

Some companies, like Provogue, a clothing manufacturer and retailer, have fallen by 12-15% after falling cotton prices.

However, Arvind Singhal, chairman of Technopak consultancy, a retail consultancy, believes that the price reduction plan is more related to the decline in consumer demand and less related to cotton price adjustment.

Consumer demand is decreasing. If businesses and retailers want to keep sales, they must cut prices.

Even sales of Diwali are not as good as expected.