Indian beauty brands suffer under new tax reforms

India’s beauty industry is suffering as a result of demonetisation and GST, but underlying growth is solid as brands target price gaps, says Raghavendra Verma

India’s robust cosmetics and personal care industry, which according to the Indian Beauty & Hygiene Association (IBHA) generated annual sales of US$8bn in 2016, is facing severe supply chain disruption and the closure of smaller brands.

Continuous double-digit annual growth registered during the last decade by the industry – noted in figures from the Ministry of Commerce and Industry’s India Brand Equity Foundation (IBEF) – has now been severely disrupted by a series of radical regulatory measures.

The shock demonetisation of 500 and 1,000 Indian rupee (INR) notes in November 2016, which removed 85% of the cash from the economy, was followed by an untidy adoption of a new Goods and Services Tax (GST) system in July 2017.

The first measure severely restricted the . . .

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