India's GST overhaul fuels $68B shopping boom during festive season
What's the story
India's recent Goods and Services Tax (GST) reform has resulted in a massive $67.6 billion shopping spree during the festive season. The spending between September 22 and October 21, the period between Navratri and Diwali, rose by 8.5% from last year, according to retail intelligence platform Bizom. This is a major boost for the economy, which had been affected by high import levies imposed by the US.
Sectoral impact
Surge in demand across sectors
The GST reduction has had a major impact on various sectors, with items like jewelry, electronics, apparel, furnishing and sweets witnessing a surge in demand. This was confirmed by B.C. Bhartia, National President of the Confederation of All India Traders. The tax cut coincided with a revival in local consumption, following an initial recovery that was halted by steep US tariffs earlier this year.
Auto boom
Spike in monthly sales for leading carmakers
India's leading carmakers, including Maruti Suzuki India Ltd., Tata Motors Passenger Vehicles Ltd., and Mahindra & Mahindra Ltd., have seen a spike in monthly sales. The GST reduction has made cars cheaper, leading to increased demand. Hyundai Motor India Ltd. saw a 20% increase in sales on Dhanteras compared to last year while Tata Motors sold over 100,000 cars between Navratri and Dhanteras this year alone.
Rural boost
Rural sector benefits from GST cut
The GST cut has also benefited the rural sector, with Mahindra witnessing a 27% increase in tractor sales. This is largely due to a good monsoon season boosting rural incomes and the tax cut encouraging more purchases. Maruti's production team has been working overtime to meet the demand for its entry-level models like Alto, S-Presso, WagonR and Celerio.
Financial growth
Increased spending across categories
The GST reduction has also resulted in increased spending across categories for financial service firms like Kotak Mahindra Bank Ltd. and SBI Cards & Payments Services Ltd. Kaleeswaran A., CFO at Crompton Greaves Consumer Electricals Ltd., noted a spike in demand for kitchen items during the festival shopping period, with products like pressure cookers benefiting from the tax cut.