Sports Industry and post GST scenario

Post GST implementation, the sport sector will become more organized and hence has a good chance in being recognized as an independent industrial sector; higher tax rate for certain categories will however act as an impediment for the sector

Impact: Positive

Brief: Sports industry in India is highly labor intensive and is inherently export oriented. The industry’s exports accounts for nearly 0.5% in overall exports. In fact, the industry’s exports (except sport garments) have recorded a solid growth of 8.8% in FY17, when India’s overall export was expanding by just 5.3%. Sport garments, that share 38% in the overall sport export has however contracted by 3% during the said period. This negative growth is owing to higher cotton prices in India as a result of which the industry’s competitiveness suffered.

As of today, this industry is largely dominated by unorganized players and is therefore difficult to access the domestic market size. This may change post implementation of the GST, as the unorganized firms will be compelled to become organized in order to remain in business. As per the value creation map under the new tax regime, any deviation will impact the ITC chain which in turn will be detrimental to the sector’s low capital businesses. Therefore, if successfully implemented and complied, SMERA believes that the new tax structure will significantly help the sport industry in being recognized as an independent industrial sector. However, raising GST rate on some sport goods and sports viewing (luxury tickets) will have a negative impact at least in the short term.

Being the fastest growing major economy, India is moving towards an all engulfing sports culture. People are showing cricket like interest in other sports as well and this has spawned several categories; demand for kits, specialized apparel as well as related equipment and media is expected to expand strongly as a result.

Segment wise growth in export(%)

FY15

FY16

FY17

Toys and sport sports

13.90

-1.12

2.26

Sporting boats

162.50

-66.67

3785.71

Gloves and Mittens

73.05

-84.12

-32.78

Sport footwear

51.68

60.38

16.35

Sports garment

4.84

-1.44

-2.98

Total sport export

11.12

3.92

1.39

Sport export excluding garment

26.14

14.59

8.86

Overall exports

-1.29

-15.48

5.33

Source: Ministry of Commerce; SMERA Research

Our exciting journey started in 2005 with rating of bank borrowers most of whom were small and medium enterprises. At that time, credit rating was a concept known only to large issuers of capital market instruments. Since then, like a caterpillar transforms itself into a beautiful butterfly, we transformed to rate bonds, bank facilities of large corporates and issuers across industries. Along came many achievements - SEBI Registration in 2011, RBI accreditation in 2012, 50,000 ratings in 2018, 5,000 Bond and Bank Loan Ratings in 2017, launch of India's first Android and iPhone app to disseminate rating, tamper-proof QR-code-enabled rating rationales, and SMERA Terminal to name a few.

Now is the time to re-emphasize our increasing footprint across all segments of ratings through the launch of our new name - 'Acuité'.

The name has changed. The spirit of upholding highest standards of analytical rigour, continuous improvement, excellence in our processes and quest for innovation remains the same. We would like to re-emphasize that we will continue to work hard to provide independent, unbiased and timely opinion of highest standard.

Acuité means 'sharpness and clarity of thought and vision'. Let our research and ratings help you take decisions with confidence.


Sankar Chakraborti
CEO