A year after GST 2.0 rate cuts took effect in September 2025, consumer demand remains strong across key categories. Auto sales and purchases of larger TVs and premium products have seen notable momentum.
Highlights
- GST 2.0 rate cuts completed one year since their September 2025 implementation.
- Consumers are increasingly upgrading to larger televisions and higher-value products.
- Passenger vehicle sales remained strong, supported by demand across segments.
- Maruti Suzuki’s entry-segment sales jumped more than 96% during April-August 2026.
New Delhi: One year after the GST 2.0 rate cuts were implemented in September 2025, their impact continues to be visible in consumer spending, with automobiles, electronics and other discretionary categories witnessing strong demand.
Lower tax rates have helped improve affordability across several product categories, encouraging consumers not only to make fresh purchases but also to upgrade to higher-value products. The trend is particularly visible in consumer electronics, where buyers are increasingly opting for larger television screens and better-featured products.
Auto sector sees strong momentum
The automobile industry has emerged as one of the major beneficiaries of stronger consumer demand. Passenger vehicle sales have remained robust, with dispatches reaching record levels.
Maruti Suzuki’s entry-level segment recorded growth of more than 96% during the April-August 2026 period, indicating a sharp revival in demand for affordable cars. Overall passenger vehicle sales were up around 36% during the period covered by the data.
The improvement has not been restricted to cars. Two-wheeler sales and broader automobile retail also registered growth of around 20% year-on-year, reflecting stronger demand across different consumer segments.
FMCG gets a volume boost
The fast-moving consumer goods sector also witnessed an initial improvement in volumes following the GST changes. Lower rates supported consumption, particularly in price-sensitive categories.
However, the benefit has been partly offset by an increase in input costs. Higher raw-material and operating expenses have put pressure on companies, limiting the extent to which the demand improvement translates into stronger margins or lower consumer prices.
GST collections remain strong
Despite the tax-rate reductions, government revenues have remained resilient. Gross GST collections have stayed close to the ₹2 lakh crore mark in recent months, indicating continued strength in consumption and economic activity.
A year after implementation, the GST 2.0 changes therefore appear to have coincided with stronger discretionary spending, particularly in automobiles and consumer durables. The next phase will depend on whether demand remains resilient amid input-cost pressures and broader economic conditions.
