Festive GST Cuts Spark Surge in Consumer Demand

The recent overhauls to India's GST structure have led to a noticeable uptick in consumer demand, driven by tax reductions on goods and services. While this has bolstered the festive season sales of consumer durables, ICRA warns that sustained growth will rely on the broader economic climate.

The festive season has witnessed a significant rebound in consumer demand, particularly for durables, as a result of recent Goods and Services Tax (GST) rate cuts. ICRA highlighted that while the initial surge is promising, ongoing demand will depend on the overarching economic landscape and sector-specific factors.

Implemented from September 2025, the 'GST 2.0' reforms have reduced rates across various sectors, aiming to lower consumer prices, cut operational costs for businesses, and stimulate overall demand. The revisions have reportedly improved affordability for essentials, housing, automobiles, and services, according to ICRA.

Data indicates that manufacturing output, especially in consumer durables, saw a notable increase in September 2025, stimulated by these GST adjustments, pent-up demand, and early festive shopping. However, the enduring buoyancy of demand post-festive season, particularly for high-value items, remains uncertain, pending further economic data releases.

(With inputs from agencies.)