Indian cosmetics face doubled import duty, prices could rise

By

Isabelle Crossley

Published
Feb 2, 2018

As the Indian fashion and beauty industry pour over the Union Government’s new budget, many are disappointed by higher tax rates on many cosmetic items that already have some retailers preparing to raise their prices.

The past year has seen the beauty industry boom in India, especially online. However, with the new government budget’s higher tax rates, some fear a dampener could be put on this. The Minister of Finance, Arun Jaitley, has proposed an increase in customs duty as well as the introduction of a ten percent welfare surcharge on basic customs duty.

Many makeup products will be affected by these new rates including perfumes, hair dyes, and manicure and pedicure products. Health and wellness products such as sunscreens will also be affected. Import duty on the aforementioned products will be doubled to 20 percent and specific international brands that will be affected include Estee Lauder, Bobbi Brown, Sephora, Innisfree, and Kiko Milano.

Online beauty e-commerce stores such as Nykaa and Purplle have been booming but, as they sell a large amount of imported products, how they react to this new budget will be important for future growth.

The multi-brand e-commerce store Shoppers Stop has already stated that they need to adjust their prices in reaction to the new budget.

“A bulk of the sales in products such as high-end perfumes, eyewear and cosmetics are in [the] premium segment which are all imported,” said the company's Managing Director, Govind Shrikhande.

Shoppers Stop will, therefore, be increasing beauty prices by around ten to fifteen percent, “especially premium ones.”

The main question moving forward is whether increased prices will cause shoppers to purchase less and what this would mean for the beauty industry.