It may be advantage videshi apparel retailers vis-à-vis their swadeshi counterparts. Domestic garment manufacturers are facing a double-whammy of spiralling cotton prices and the 10 per cent excise duty levy by the Budget on their branded products. This has narrowed the gap between brands manufactured in India and those imported.

Domestic garment manufacturers and retailers such as Pantaloons, S Kumars and Arvind Brands have hiked or are looking to raise prices of their branded products by between 10 and 18 per cent to offset costs. Cotton prices, too, have increased nearly 40 per cent in the last two months.

This could also lead to urban shoppers shifting from local brands to foreign marquees as prices become more competitive in the premium segment. While at the lower end of the spectrum consumers will clearly opt for value brands.

Interestingly, the excise duty levy comes at a time when several international brands are making a beeline for India. Many are tweaking their pricing strategies to attract consumers.

Ms Ananya Singh, 23, an IT professional, addicted to retail therapy, says: “It would obviously now make sense to shop during sales.” She points out that consumers with a preference for the Mangos and Zaras of the world would find the price gap between them and say a Van Heusen or a Color Plus narrowing. “I'd much rather opt for a global brand instead of a local one as the price difference will be marginal,” she admits.

Mr Darshan Mehta, President and CEO, Reliance Brands, which retails global labels such as Diesel, Paul & Shark, Quiksilver, Mark's and Spencer, points out his advantage. “In our case the impact of excise duty would be negligible as most of the garments are made-to-order and imported. A certain amount of import duty is already paid on it. Hence, we will not bear the brunt.”

But it is a cause for concern for others. Mr Ashish Dikshit, President, Madura Fashion and Lifestyle, said: “If raw material prices continue to rise we could hike prices by another 10-12 per cent in the winters. This could result in a 30 per cent effective hike in retail prices. It could also push people towards value brands.”

However, not all Indian manufacturers are fazed. Mr Charath Narsimhan, Chief Executive Officer, Celebrity Fashions, which owns the label Indian Terrain, said: “We do not see any threat from imports. Even after the price hike the difference between imported and domestic brands is substantial.”

With the garment industry again announcing a two-day shut down from Monday, Mr Sanjay Jain, Joint Managing Director, TT Ltd and Vice-President, Federation of Hosiery Manufacturers Association of India, feels the industry has come to a standstill after the Government imposed the excise duty overnight.

Citing an example, he said: “A simple pair of jeans which sold at Rs 500 a year ago, today costs around Rs 650 and will go up to Rs 730 after excise duty…the Government has gifted 10-15 per cent inflation through its imposition.”

Shares of listed apparel makers dropped on Friday. Arvind Mills shares closed 2.73 per cent lower at Rs 55.20, while Pantaloon Retail India Ltd traded at Rs 263.45 (-2.24 per cent). Shares of Grasim stood at Rs 2,356.50 (+1.39 per cent), while Raymond Ltd traded at Rs 286.75 (-2.99 per cent).

(With inputs from Mumbai and Bangalore bureaus)

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