Are you looking to buy a medium-sized car and maybe also a flat-screen TV? While you’re at it, why not throw in a shirt or two – but make sure they cost less than Rs 2,500 each. If you’re out shopping for Diwali gifts, the government’s GST cuts have made it much cheaper to fill that shopping list.
September was a month of record-breaking sales across multiple sectors in India, and spending in October shows no signs of slowing. A potent combination of sweeping GST rate cuts and the festive season’s buying frenzy has pushed consumption into overdrive.
Passenger vehicle sales shot to an all-time high, while consumers flocked to buy everything from electronics to everyday groceries at sharply lower prices.
Passenger vehicle sales, sluggish for the first three weeks of September, suddenly roared ahead once the GST reductions came into effect. Manufacturers wasted no time slashing sticker prices, and the Navratri period delivered an additional jolt of demand.
Automakers say they haven’t seen this kind of sales momentum in years, with the festival rush filling showrooms.
Maruti Suzuki delivered 1.65 lakh vehicles in the first eight days of Navratri, nearly doubling its sales from the same window last year. Hyundai, Tata, and Mahindra reported similar spikes, with some dealerships struggling to cope with footfalls.
“The cuts came just in time for the festival season,” said one Delhi dealer. “Customers who were hesitating just walked in and bought.”
The textile sector has also been transformed. Online retailers such as Raymond Lifestyle and Amazon rolled out price cuts of over 50 per cent on man-made textiles priced below Rs 2,500 – a change enabled by GST being slashed from 18 per cent to just 5 per cent.
Shirts, trousers, and fabrics that had been languishing in virtual carts suddenly found eager buyers, as middle-class households recalibrated budgets and indulged in wardrobe upgrades. “We’ve seen a big bump in sales,” said a Delhi store owner.
Electronics, particularly air-conditioners and flat-screen televisions, saw an equally dramatic lift. GST on these items dropped from a hefty 28 per cent to a more manageable 18 per cent. Precise figures aren’t yet available, but anecdotal reports suggest record-breaking sales.
Flat-screen TV sales, which had been stagnant since the start of the year, surged during the Navratri-Dussehra window. Samsung reported its best sales ever for the period, and, crucially, customers appeared willing to go for bigger and more expensive models – the kind of upscaling driven by both tax cuts and the celebratory mood.
Mobile phones, however, have been left out of the party. The GST rate on handsets has not been reduced, staying firm at 28 per cent. Retailers grumble that this may have capped demand, even as other electronic segments soared.
For ordinary households, the most visible change is in the daily shopping basket. GST on many consumer staples and packaged foods was slashed from 18 per cent or 12 per cent down to 5 per cent. The result: lower shelf prices on everything from biscuits and chocolates to instant noodles, soaps, and toothpaste.
Companies scrambled to respond. Amul swiftly cut prices across up to 700 products, ranging from milk and cheese cubes to frozen french fries. Mother Dairy trimmed costs across its entire range, from plain milk to flavoured milkshakes. Nestlé, Dabur, and Colgate-Palmolive India followed suit, dropping prices sharply. Some firms, rather than reducing prices, chose to increase package sizes, giving consumers more value for the same money.
Not every sector has passed the benefits on. Cement duties have been reduced from 28 per cent to 18 per cent, but manufacturers have yet to cut prices. Analysts suggest this is because profit margins are already thin and firms prefer to “digest” the cut rather than pass it fully to customers.
As Fitch Ratings put it: “We expect these and other GST changes to result in lower prices, though some firms may seek to absorb the benefit themselves rather than passing it on to consumers through price cuts.”
Overall, what this adds up to is a mini-consumer boom. The GST changes were intended to stimulate demand in the face of export market turmoil unleashed by US President Donald Trump’s steep import tariffs.
India’s chief economic adviser V. Anantha Nageswaran says the GST cuts should “partially offset” the drag from US tariffs on Indian goods by replacing export weakness with stronger domestic consumption. They are also expected to lighten the load on household budgets.
For now, the strategy has worked. The GST cuts have dovetailed perfectly with the festive season, meaning shopping carts are fuller, car dealerships busier, and electronics showrooms buzzing.
Whether this momentum sustains beyond the festival glow of Navratri and Diwali is another matter. Economists cheer the surge in sales but warn that a government revenue shortfall could dim the glow once the lights fade.
Aditi Nayar, chief economist at ratings agency ICRA, cautioned: “The GST rate cuts will certainly boost festive demand, but the impact on revenues and the extent of price pass-through will determine how durable this uplift proves to be.”