While the recent wedding and festive season brought a wave of relief for many businesses across the country, helping many to even make a good recovery in sales, it may not be enough for the fashion-related economy to come out stronger from the current phase. As a result of various economic and even environmental factors, clothing might end up becoming a little more expensive for the common consumer. We take a deep dive into what may lead to us having to spend a few more bucks for fashion and how you can control your budget as that happens.
Rising Cotton Prices
As per global tech solution company Common Objective, cotton is the second most used fabric in the fashion industry at 21 per cent, following polyester which stands at 65 per cent. But even in second place, cotton becomes one of the most crucial fabrics/fibres given that its organic version holds great importance in the sustainable fashion world. With conscious fashion already struggling with the misconception of being unaffordable, the increase in cotton prices couldn’t have had worse timing. That said, in a hot/humid country like ours, breathable cotton is a hot favourite amongst a majority, not to mention the fabric’s crucial role in traditional attires like saris, dhotis, kurtas and more.
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So why is cotton becoming more expensive?
A majority of 2021 saw the price of raw un-ginned cotton, better known as kapas, rise to an all-time high. The price rise was majorly due to a pink bollworm pest attack in parts of cotton-growing states like Punjab, Rajasthan as well as surplus rain in Haryana’s cotton-growing regions in the months of August and September which led to the lowest cotton yield figures in the past five years. This saw cotton prices rise way above the Minimum Support Price (MSP) which is often seen as an average threshold for prices. In Punjab, for example, where the MSP for a quintal of kapas was ₹5,925, rates per quintal of kapas went above ₹7,700.
The effects of climate change on cotton prices were seen globally as well with heavy rains in American cotton-growing regions like Texas and the Mississippi Delta as reported by the Indian Express. With a ban on cotton grown from China’s Xinjiang region owing to humanitarian and labour condition concerns, the Chinese demand for cotton continues to increase, being one of the biggest manufacturers of global fashion. Both the U.S. and China are major players when it comes to the cotton-related economy, since the U.S. is the world’s biggest exporter of cotton and China is one of the biggest importers of the same. With China’s cotton demand increasing, the pressure to produce more falls on India as well, leading to the increase in prices locally.
The Fuel Price Rise
As the increase in fuel prices continues to affect our day to day lives, it also increases transportation costs for not just cotton but also other raw materials and finished fashion products. Brent crude, one of the most heavily traded crude oil grades in the world, hit an all-time high of $85 per barrel in 2021, almost doubling in comparison to $42.5 per barrel price a year ago. This in turn led to a serious increase in Indian fuel prices as well, with the price of petrol in Delhi at an all-time high of ₹106.89 per litre and ₹112.78 per litre in Mumbai. Diesel also hit high price levels of ₹103.63 a litre in Mumbai and ₹95.62 per litre in Delhi.
Increase in GST
Late last year, the Central Board of Indirect Taxes and Customs (CBIC) announced that the Goods and Services Tax (GST) rate on garments, textiles, and footwear would be raised from five per cent to 12 per cent with effect from January 1, 2022. As the fuel duty cuts by the government along with increased spending due to the COVID-19 crisis led to revenue challenges for both the federal and the state governments, this would be one of the ways to stabilise revenues. The decision, however, has now been put on hold following dissatisfied reactions from major players of the industry. In an industry that is mainly an unorganised sector, made up of a majority of MSMEs, the burden may not just transfer to the end-user of the finished product but also the smaller manufacturing and handloom players. The increase in prices could lead to a drop in demand, and consumers moving towards lower quality purchases which are in turn unsustainable for the environment and lead to more frequent wastage.
The Small Business Owner’s Dilemma
In a scenario where consumers are being encouraged to shop more from local brands to maintain a sustainable wardrobe, increasing prices when you’re smaller homegrown brands tend to put you in a tough competitive spot. Even as the rise in GST is on hold at the moment, the increase in overheads still ends up being reflected in end-product prices.
A little older than two years, Indian conscious brand Maikai recently increased overall prices for their products. Even with the increase, though, Maikai’s star product, its patented cotton sports bra continues to be a fairly affordable made-to-order sports bra at ₹2450. But the marginal increase is important, given the need for fair wages and increasing overheads, explains the brand’s founder, Vidya Sethi. “We pay fair wages to our small team of tailors and increase these wages on completion of each year. When COVID-19 hit, that was the first year of our operation. However, we still offered a raise on completion of the year,” says Sethi, “you always have to keep your customers in the loop and you have to be open about why you’re charging what you’re charging.” The brand recently shared a complete price breakdown, explaining how only 23 per cent of it is dedicated to profits that are reinvested and used to cover sale prices. “Giving the right information to your community is something I’m hoping more brands do. I’m definitely taking this up this year,” she says. She goes on to explain how consumers tend to be more empathetic towards a situation like an increase in product price if they feel connected to the brand on a personal level.
Image Source: Instagram/maikai
Tackling The Rise In Fashion Prices
If you’re trying to make sure your fashion choices don’t end up burning a hole in your pocket, here are some things that might help:
- Budget your spending: Make sure you don’t spend more than you can account for. Try making a list of everything you need and try sticking to it to make sure you don’t splurge on things you won’t.
- Educate yourself: Know what you’re paying for. Look for price breakdowns to ensure what you’re paying is really worth it on a conscious level. Fair wages are nothing but a basic in today’s world and making sure the product you want to buy is made by a happy, fairly paid person will go a long way.
- Buy less but buy better: Buying too many things is so last season! Focus on buying better as opposed to opting for hauls encompassing things you will hardly wear!
- Local brands: A lot of local brands offer high fashion, stylish alternatives to all the trendy pieces you’re looking for, but often at a better price. Give shopping local a chance and see your life and wardrobe change for the better!