The Indian government’s latest move to rationalise GST rates is set to give consumer demand a much-needed push. According to a report by Centrum Institutional Research, this reform could significantly improve sentiment and drive volume growth across essential and daily-use products.
The focus is on restructuring GST slabs to make essentials more affordable. Think items like packaged snacks, dairy products, and condiments. The shift is expected to narrow the price gap between organised and unorganised players, making it easier for smaller businesses to compete.
With lower GST rates, companies can now explore two key strategies. For budget products priced between Rs 5-10, grammages will likely increase without changing the price tag. For premium products, brands might either boost quantities or reduce MRPs to attract more buyers. Either way, the consumer wins.
The report highlights how this change couldn’t have come at a better time. Demand recovery for consumer goods has been sluggish over the past 18 months, thanks to inflation and broader macroeconomic pressures. But there’s a silver lining. Q1 already showed a slight uptick in volumes, and optimism is creeping into company forecasts.
Festive seasons are traditionally a boon for sales, and the GST reduction will amplify that momentum. Combine this with other government measures like MNREGA wage hikes and income tax cuts, and disposable incomes are set to rise. More money in pockets usually means higher spending.
One of the biggest takeaways? The 12% GST slab is reportedly being scrapped. Items like ketchup, cheese, and even noodles will now fall under the 5% category, making everyday essentials more accessible. This is especially impactful for rural markets, where affordability drives purchasing decisions.
Industry experts see this as a turning point. After quarters of muted growth, the stage is set for a demand revival. Companies banking on festive sales now have an extra edge, and consumers can look forward to better value for money.
The broader message is clear. Lower taxes, higher volumes, and improved sentiment could finally kickstart the consumption cycle India’s economy needs.