GST Cuts To Usher In 'Golden Era' For Consumption-Driven Sectors? Industry Leaders Share Insights
The next-gen GST reforms will boost consumption, leading to a "golden period" for consumer durables from FY26 to FY31, Blue Star MD said.
The upcoming GST revamp has created a buzz, with the key focus being on daily-use items. Products such as ghee, butter, toothpaste, shampoo, paneer, pumpkin, paratha, and milk powder, which are currently taxed at 12% and 18%, could potentially move down to the 5% slab. Industry leaders expect this move to increase consumption and offer a boost to the small and medium enterprises.
B Thiagarajan, Managing Director of Blue Star Ltd., believes this move will drive consumption growth, calling fiscal 2026 to fiscal 2031 a "golden period" for consumer durables. In an interview with NDTV Profit Thiagarajan further added that with the implementation time just ahead of the festive season, could encourage customers to purchase multiple products due to reduction in per-unit cost.
He further noted that some consumer durables were already on a strong growth path and the rate cut decision makes it more favourable for the companies. However, he added that global economic headwinds continue to remain a concern.
From the food industry’s standpoint, Heritage Foods Ltd. Chief Executive Officer Srideep Nair Kesavan said that a GST rate cut would boost consumption and reduce dependency on edible oil.
Ghee, contributing about Rs 35,000 crore in revenue, stands to gain the most from this change. He also termed the timing of the rate cut as “very opportune.”
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Chandrakant Salunkhe, President of the SME Chamber of India and SME Export Promotion Council, during the discussion highlighted that the GST cut would give a significant boost to SMEs.
Meanwhile, Sanjay Nayar, President of ASSOCHAM, who welcomed the rationalisation also pointed that there is a need for further groundwork. He stressed that the MSME sector also require a secular pickup and strong, lasting consumption trends.
According to Nayar, the real impact will only become clear over the next year, depending on how consumption patterns will change.
It is not just the daily items that will get cheaper. Even pharmaceutical products, medical equipment, cement abd cars will see a likely decline in prices. The services sector may also undergo rationalisation.
On the other spectrum, high-end goods may continue to remain expensive. A special 40% GST rate is being proposed for luxury cars, SUVs, motorbikes above 350 cc, carbonated beverages, tobacco, and related products.
However, it remains uncertain whether the compensation cess regime will be phased out, replaced with an additional levy, or subsumed within the GST framework.
The final decision will rest with the GST Council, which meets on Sept. 3 and Sept. 4 in New Delhi.
