GST 2.0 rate cuts fuel festive season demand rebound for consumer durables; check upcoming data for sustainability insights.
Recent economic indicators suggest that India’s consumer demand experienced a notable boost during September–October 2025, driven largely by the Goods and Services Tax (GST) rate rationalisation, pent-up demand, and the earlier-than-usual start of the festive season. According to ICRA, these combined forces contributed to stronger purchasing activity across several categories, which is expected to support manufacturing output growth for October 2025 as well. However, while the current surge is encouraging, the key question remains: can this momentum be sustained once the festive season ends?
The GST rate adjustments appear to have had an especially positive impact on fast-moving consumer goods (FMCG) and other small-ticket items. Lower prices can make these everyday products more accessible to a broader segment of consumers, potentially extending demand beyond the festive window. For households, reduced GST rates translate into immediate savings, incentivizing higher spending on routine purchases even after temporary festive enthusiasm fades. This suggests that, at least for low- to mid-value items, consumption could remain relatively stable in the short term.
However, ICRA notes that the situation is less clear for big-ticket or discretionary items such as automobiles, large appliances, and luxury goods. Purchases in this category depend on consumer confidence, long-term economic outlook, and liquidity positions. Although the festive season often brings promotional offers and financing schemes that encourage buying, sustaining this appetite afterward becomes more challenging. High-value purchases typically require stronger income certainty and reduced financial stress—factors that may not benefit from GST cuts alone.
Another obstacle in assessing sustained demand lies in the timing of key data releases. Credit card transaction data for October 2025—an important indicator of consumer spending patterns—will only be available toward the end of November. Additionally, GST collections for October transactions, which reveal actual economic activity levels, will not be published until December 1, 2025. These data points are essential for determining whether the current buoyancy reflects a short-term festive spike or a deeper, more durable revival in consumption.
Despite these uncertainties, the encouraging performance during the festive window remains significant. The combination of policy support and seasonal enthusiasm has provided manufacturers with a welcome uplift. For sectors already struggling with slowdowns earlier in the year, this improved demand environment could help stabilize production schedules and inventory cycles. Still, the sustainability of these gains will depend on broader economic conditions, including employment trends, inflation levels, and interest rates—all of which influence household purchasing power.
In summary, while GST cuts and pent-up demand have undeniably fueled a strong surge in consumption during the 2025 festive season, the long-term outlook remains mixed. Small-ticket items may continue to benefit from the rationalised tax structure, but big-ticket purchases will require deeper economic stability to maintain momentum. With critical spending and GST data still pending, a clearer picture of India’s consumption trajectory will emerge in the coming weeks.