GST Cut On Footwear Will Aid Recovery In Sub-Rs 1,000 Segment: Bata India CEO

Goods and Services Tax (GST) reforms promised by Prime Minister Narendra Modi in his recent Independence Day speech could bring significant relief to the footwear industry. As per reports, the GST rate on footwear priced below Rs 1,000 could be reduced to 5% from the current 12%, under the new reforms. 

In an interview with NDTV Profit on Wednesday, Gunjan Shah, MD and CEO of Bata India, said it was a “welcome announcement.” Shah projected a boost in consumption and recovery in demand for the sub-Rs 1,000 segment in the footwear industry under the expected GST reforms.

“Three years back the GST rate was changed for footwear from 5% to 12%, which impacted the industry's volume significantly, especially the less than Rs 1,000 category, which comprises almost 80% to 85% of the business. Not so much for Bata, but still a pretty large amount for the overall sector and therefore, it should have a positive effect,” he said.

Shah noted the sub-Rs 1,000 price category earlier contributed 47% to Bata’s sales, but that dropped by nearly 10% after the GST rate increased from 5% to 12%.

“This will aid us in trying to pass value to consumers,” Shah said.

Currently, the GST structure has been divided into five slabs: 0%, 5%, 12%, 18% and 28%. The proposed GST reforms could reduce it to three slabs: 5%, 18% and 40%. Most goods that come under the 12% slab are expected to go under the 5% slab.

“From a footwear perspective, I think it is much needed. The middle-class and mass-market consumers have been facing pressure, especially post-Covid, over the past three years or so. I think this (GST reforms) will aid their recovery,” the top executive emphasised.

Shah drew parallels with the apparel industry, which operates under a dual GST rate of 5% and 12%. He argued that footwear, being equally essential, deserves similar treatment.

Beyond affordability, the company is making its online presence felt. Shah said online sales now contribute double-digit share to Bata India’s business, driven by its omnichannel strategy.

Shah outlined Bata’s vision to remain the “footwear of choice for the entire family”.

“We would like to make sure that this entire journey is driven by innovation, expansion, as well as a great consumer experience. And that all of this, hopefully, translates to profitable growth and improvement in metrics,” he underlined.

Bata India shares were trading 1.06% lower at Rs 1,129.70 apiece on the NSE on Wednesday at 1:07 p.m., compared to a 0.32% rise in the benchmark Nifty50 at 25,061.1.