GST 2.0 and the festive economy: When policy meets consumer sentiment

For weeks, Indian families held back big-ticket purchases—cars, air-conditioners, refrigerators, even everyday appliances—waiting for one date. On 22 September, the first day of Navratri, the revised Goods and Services Tax (GST 2.0) kicked in.

And the shopping dam appeared to have burst. Showrooms filled, carts clicked, and retailers across categories saw a surge that turned a Monday into a festival.

At its 56th meeting, the GST Council unveiled a sweeping realignment of indirect tax rates. The system was pared down from four slabs—5%, 12%, 18% and 28%—to just two: 5% and 18%.

Nearly 99% of daily-use items moved into lower brackets. The compensation cess on automobiles was scrapped, shaving costs off small and mid-sized vehicles. Food and beverage services, including coffee, saw rationalisation aimed at boosting affordability and easing compliance for the hospitality sector.

For consumers, the implications were immediate. Everyday goods got cheaper. Cars shed price tags inflated by the old cess. Households with stretched budgets found a little breathing space. And with the festive calendar stretching from Navratri through Diwali and into the New Year, the timing was deliberate.

Relief in wallets, optimism in sentiment

India’s economy leans heavily on domestic consumption, and the government’s reform is designed to unlock spending power. In a climate of global slowdown, trade tensions, and policy uncertainty, the country’s resilience has stood out.

The LSEG-Ipsos Primary Consumer Sentiment Index (PCSI) for September placed India at a national index score of 57.0, almost unchanged from August’s 57.6. That stability, while Malaysia and Indonesia saw sharp declines, has been telling.

Suresh Ramalingam, CEO of Ipsos India

Suresh Ramalingam, CEO of Ipsos India, noted, “Consumer sentiment in India has stabilised in September, following the anxiety and sharp decline witnessed in August. While global issues like Trump-era tariffs have had little direct impact on the average Indian consumer, domestic developments have played a key role in restoring confidence. The government’s announcement of GST 2.0 reforms earlier this month could bring a sense of relief and optimism among consumers who have been grappling with the high cost of living—despite some easing in food inflation.”

Domestic consumption continues to be a strong engine for economic growth. The rationalisation of GST rates is a significant win for consumers, with the new standard slabs set at 5% and 18%. For instance, the reduction in GST on passenger cars from 28% to 18% will result in considerable savings—one of many examples of how these reforms are creating a more favourable economic environment for both consumers and businesses.

With the onset of festivals, Ramalingam added that savings from GST 2.0 are likely to flow into shopping sprees and big-ticket purchases. “This, in turn, is expected to drive higher demand across retail channels, benefiting both traders and brands,” he stated.

Companies move early

Even before the reforms took effect, companies adjusted strategies. Spinny, the full-stack used car platform, cut prices across its inventory to reflect upcoming changes.

“For us, the customer comes first, always. Whether it’s pricing, quality, or the buying or selling experience, transparency and trust are non-negotiable,” said Hanish Yadav, senior vice president and business head at Spinny. He added that by taking a proactive stance, adjusting prices before the GST reforms take effect, its customers could make confident decisions without waiting or second-guessing market movements.

Financial players also sought to capture festive sentiment. L&T Finance Ltd. rolled out new offers in its two-wheeler Finance business, including No Cost EMI, Prompt Payment Rebate, and an ‘EMI Lite Festive’ scheme. Customers could pay only the interest portion for the first two months, effectively pushing the principal into 2026.

Sudipta Roy, managing director and CEO at LTF, said, “With an advanced version of ‘Project Cyclops’ now live in our two-wheeler finance business and the revised GST slabs for bikes and scooters effective this month, we believe this is an opportune time to launch attractive schemes for our customers. Our two-wheeler finance business is one of the top three fulcrum products. We foresee that these offers will drive a substantial surge in demand and strengthen our leadership position.”

A festive reset for households

Online marketplaces were among the first to feel the GST tailwind. Flipkart and Amazon launched festive sales the same day GST 2.0 went live. Early Access to Flipkart’s Big Billion Days on its ‘Minutes’ quick-commerce app recorded over 45 lakh unique visitors and double the usual order volumes. Smartphones dominated carts, but essentials—atta, ghee, energy drinks—moved just as fast.

Within the first hour, a shopper placed a INR 1.57 lakh cart featuring iPhone 16 models, while another bundled dry fruits, pharmaceuticals, and groceries. One in five opted for Flipkart’s smartphone exchange program, completed at the doorstep within half an hour.

Hemant Badri, senior vice president, head of minutes and supply chain, customer experience and ReCommerce, Flipkart Group, framed it as a cultural shift. “For the first time, millions of customers are celebrating the country’s biggest shopping festival not just online, but instantly—with Flipkart Minutes delivering everything from ice creams to iPhones in just 10 minutes. Thanks to the recent GST reforms, this festive season has become even more fulfilling for customers as they are able to save more while shopping for their favourite products,” he added.

In categories where pricing sensitivity drives volumes, brands leaned on GST benefits. Abhay Batra, co-founder and CFO of lingerie brand Clovia, said, “By passing on GST savings to our customers across all 86 exclusive Clovia stores in India, along with our presence in nearly 3,000 partner stores, we expect to drive greater adoption of branded intimate wear in value-sensitive markets. A 6.25% reduction in MRPs is a meaningful change. He hopes that this will not only accelerate the shift towards organised players like Clovia but also make the right fit more affordable and accessible for Indian women.

Matt Chitharanjan, co-founder and CEO, Blue Tokai Roasters.

Blue Tokai Coffee Roasters cut prices across 180 cafés. “The recent GST reforms announced by the Government of India are a big step forward for the retail and hospitality sectors, simplifying the system, easing compliance, and allowing businesses like ours to pass on more value to our customers,” said co-founder and CEO Matt Chitharanjan.

In motorcycles, the reforms created contrasting dynamics. While GST on bikes above 350cc was hiked from 28% to 40%, Triumph and Bajaj Auto chose to absorb the impact on their 400cc range.

“The Triumph 400 cc platform has set new benchmarks in performance, design, and value. Even with the GST increase, we wanted to ensure that riding enthusiasts are not discouraged by higher costs,” said Manik Nangia, president Probiking, Bajaj Auto Ltd.

Healthcare players, too, emphasised access. “Healthcare affordability is a responsibility we take very seriously,” said Varun Suri, CEO–Consumer Division, Dr. Morepen. “Through Dr. Morepen Pharmacy, our focus is on chronic medicines and high-quality generics, made even more affordable with the GST benefit. Coupled with the convenience of our mobile app and last-mile delivery, we are creating a healthcare ecosystem where patients can rely on both savings and trust.”

Nationalism meets pricing

The reforms also intersected with political messaging. In his recent address, Prime Minister Narendra Modi urged citizens to buy Indian products.

Liberty Shoes picked up the cue with its campaign ‘Mera Joota Hindustani Hai’. The anthem-driven campaign tied swadeshi sentiment to design innovation and affordability, leveraging GST cuts to recalibrate pricing for middle-income households.

According to Anupam Bansal, executive director, Liberty Shoes, it has brought affordability and balance to the footwear sector, enabling brands like his to recalibrate pricing and make high-quality, stylish sneakers accessible to a wider audience. He said, “This is a perfect time to re-ignite conversations around swadeshi sentiments with the recent GST reforms as well. With ‘Mera Joota Hindustani Hai’, we wanted to create more than just a campaign—it is a celebration of India’s diversity, pride, and design spirit.

Taken together, GST 2.0 and festive momentum illustrate how tax reforms ripple through behaviour. Retailers prepped inventory, financiers dangled new credit models, e-commerce platforms tested delivery speed as a differentiator, and brands recalibrated positioning. Consumers, meanwhile, found room to indulge without guilt.

The measure of success, however, will be sustainability. One season of buoyant spending does not automatically translate into structural growth. Questions remain on how the government balances revenue with relief, and whether reforms stick amid shifting political priorities.

For now, GST 2.0 has given India’s consumption story fresh energy at precisely the moment retailers, manufacturers, and marketers needed it. As families gather through Navratri, Diwali, and beyond, purchases are no longer just transactions. They are votes of confidence in the economy—and in the belief that festive spending can light up more than homes.