The GST Council’s decision to slash tax rates on everyday essentials and personal-use products ahead of the festive season is expected to revive domestic consumption, lift rural demand, and strengthen growth in the FMCG sector, industry leaders said on Thursday.According to news agency PTI, FMCG companies plan to pass on the benefits to consumers either by increasing grammage or cutting stock-keeping unit (SKU) prices, with analysts estimating price drops of 8–10% depending on brands, translating into 2–3% growth for the industry.

Calling the move “game changing”, Marico MD & CEO Saugata Gupta said, “By making essential consumer products more affordable, especially in the run-up to the festival season, these reforms will play a pivotal role in stimulating economic momentum and building long-term growth in the FMCG sector.”Dabur CEO Mohit Malhotra termed it a “timely and transformative move,” stressing that the cuts will make soaps, shampoos and toothpastes more affordable, while driving demand in rural and semi-urban markets.Godrej Consumer Products CFO Aasif Malbari welcomed the decision, stating the company was committed to passing on benefits to consumers. The All India Consumer Products Distributors’ Federation (AICPDF) said the reduction would improve distributor and retailer liquidity by Rs 4,000–5,000 crore, while boosting rural consumption by an estimated 8–10% in the next two quarters.

Shares of leading FMCG firms surged following the Council’s approval. Britannia, Dabur, HUL, Nestlé and Emami all logged strong gains on the BSE, while consumer durables and cement stocks also rallied. The GST cuts cover a wide range of items, from hair oil, shampoo, toothpaste and soap to food products like butter, dry fruits, ice cream, biscuits and beverages, with rates slashed to 5% from 12% or 18%. Cement will now attract 18% GST instead of 28%.As per PTI, Joy Personal Care Chairman Sunil Agarwal said rural India, already driving FMCG growth for six quarters, will see further demand strength. Industry executives added that retailers are bracing for strong festival sales rebound as companies implement revised prices on existing stock.Grant Thornton Bharat’s Naveen Malpani noted that the cuts could lead to price drops of 8–10% depending on supply chain efficiencies, further stimulating consumption.Industry experts believe the reforms will add 2–3 percentage points to FMCG sector growth, which is currently expanding at 10–12% annually, making the reform a “landmark step” ahead of the festive season.

GST rate cuts announced by the Modi government have served as a booster shot for the Indian economy and markets, with consumption driven growth expected to aid the economy at a time when it is faced by 50% US tariffs.The comprehensive GST modifications announced by Finance Minister Nirmala Sitharaman, with revenue implications of Rs 48,000 crore, have been regarded by market analysts as a “consumption revival bombshell” that has energised the previously sluggish Sensex and Nifty, according to an ET analysis.

The market’s immediate reaction was significant, with the Sensex recording an increase of nearly 900 points, whilst the Nifty advanced by 1%, approaching a potential breakthrough above the critical 25,000 mark. These movements have sparked considerable interest in understanding the specific changes and their implications for the market.Speaking about the wider implications, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, states: “The revolutionary GST reform has come better than expected benefitting a wide spectrum of sectors. The ultimate beneficiary is the Indian consumer who will benefit from lower prices. The potential big boost to consumption in an economy that is already in growth momentum will be big and may surprise on the upside.“Also Read | GST rate cuts from September 22! All you need to know about new tax rates for items – 75 FAQs answered

GST rate cuts: Auto sector a big beneficiary

The surge in automotive shares aligns with substantial tax benefits. According to Jefferies, the reduction in GST rates from 28% to 18% for two-wheelers below 350cc and small cars could trigger significant market growth, benefiting companies like TVS and Maruti. For M&M, the unexpected reduction in SUV taxation from 50% to 40%, including cess, presents a remarkable advantage.The rural market segment shows promising developments. Emkay’s study indicates that “tractors and agri-machinery that have witnessed a GST cut to 5% from 12%” will experience considerable demand growth. “Such sharp reduction directly lowers acquisition costs for farmers and boosts affordability,” presenting substantial opportunities for organisations like Mahindra & Mahindra and Escorts.According to the research organisation, “this strategic tax relief in the auto space could potentially offer a 5-10% boost in demand across categories,” explaining the current market momentum in automotive shares.In the stock market, automotive shares showed remarkable performance, with M&M recording a notable 6% increase. Other manufacturers including Eicher Motors, TVS, Bajaj Auto and Hero Moto experienced gains between 1-2%.

FMCG booster

The FMCG sector emerges as the second-largest beneficiary of the tax reduction, receiving more comprehensive relief than anticipated. According to Amit Agarwal, SVP-Fundamental Research at Kotak Securities: “The GST rate for almost all food items (biscuits, instant noodles, nutrition, namkeen, instant coffee, chocolates, ice cream, fruit juices, sauces and cheese) has been cut to 5% from 18%/12% and that for select daily essential personal care categories (soaps, shampoo, hair oil and toothpaste) has been reduced to 5% from 18%.“Jefferies indicates this development was “largely unanticipated,” resulting in “positive for consumer staples companies, notably Colgate, Britannia, Nestlé, followed by HUL, GCPL, Marico, Dabur, Patanjali.” The extensive range of products affected explains the increased investor attention towards FMCG stocks.Also Read | GST rate cuts bonanza! What is cheaper and dearer? Check full list of items in 0%, 5%, 18% & 40% slabs

Cement sector rejoices

The cement industry benefits from a substantial GST reduction of 10 percentage points, decreasing from 28% to 18%, addressing persistent investor worries. Jefferies elaborates on the significance: “The reduction in GST rate by 10ppt creates some volume upside but potentially also headroom for price hikes, where the sensitivity of the industry to a profit increase is high (1% pricing is 4-5%).”The combined advantages of increased volume and pricing flexibility explain why analysts predict an upturn in cement stocks, which have remained relatively stable until now.

GST rate cuts: Impact on Indian economy

The GST reforms carry significant implications beyond sectoral advantages, contributing to broader economic momentum. As Garima Kapoor, Economist and Executive Vice President at Elara Capital, states: “We expect GST related demand boost to add 100 to 120 bps to the GDP growth over next 4-6 quarters, thereby nullifying the negative impact of higher tariffs on exports to US.”According to Dr. Vijayakumar’s assessment, these changes could “boost India’s growth to 6.5% in FY 26 and perhaps 7% in FY 27 with impressive gains in corporate earnings,” establishing solid foundations for continued market advancement.The implementation arrives at an opportune moment as various policy instruments demonstrate positive alignment. As noted by Kapoor: “Today’s GST rate changes, along with RBI’s rate cuts, income tax rebates announced in FY26 budget and easing inflation are all levers for a consumption uptick in the economy. We remain constructive on the uptick in consumption demand in the economy as multiple policy levers turn favourable for the first time in a decade.“Nilesh Shah, MD of Kotak Mahindra AMC, indicated that the GST restructuring would help counterbalance the negative effects of US tariffs in subsequent quarters.Also Read | Prices of small cars, two-wheelers under 350cc, to come down significantly on GST cut; bigger cars in 40% slab

GST rate cuts: What should investors do?

The stock market responded favourably as investors recognised how reduced GST rates could boost consumer demand across various sectors. Jefferies anticipates “festive demand should see a positive boost,” whilst cautioning about “some negative demand impact in September.”The projected increase in consumption could generate cascading benefits for broader economic expansion. Analysts emphasise that swift transfer of tax benefits to consumers by companies would be crucial, potentially enhancing both consumer confidence and expenditure.“Lower taxes on essentials, FMCG products, autos and cement will leave consumers with more money in hand. This should directly boost demand, help traders and businesses see higher volumes, and may even favourably impact next quarter’s earnings. It also carries the potential to ease inflation.” said Shripal Shah, MD & CEO, Kotak Securities.These wide-ranging tax adjustments, encompassing both everyday necessities and substantial purchases, have led investors to consider this a fundamental transformation rather than a short-term measure. This perspective has driven widespread market gains across diverse sectors including automobiles, FMCG, white goods, cement, and insurance.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)

Former US National Security Advisor John Bolton lashed out at US President Donald Trump on Thursday (local time) for deteriorating US-India relations through a 50% tariff imposition on India, which he claims has driven Prime Minister Narendra Modi towards Russia and China.“The White House has set US-India relations back decades, pushing Modi closer to Russia and China. Beijing has cast itself as an alternative to the US and Donald Trump,” Bolton wrote on X.

He criticised Trump’s tariff decisions, stating they have undermined decades of Western diplomatic efforts to distance India from its Cold War alliance with the former Soviet Union (Russia) and address China’s growing influence.

In multiple other social media posts on Monday (local time), Bolton had claimed Trump’s economic policies have compromised strategic achievements, whilst providing Chinese President Xi Jinping an opportunity to alter East Asian geopolitics.“The West has spent decades trying to wean India away from its Cold War attachment to the Soviet Union/ Russia, and cautioning India on the threat posed by China. Donald Trump has shredded decades of efforts with his disastrous tariff policy,” Bolton posted.“Donald Trump’s unwillingness to consider diplomatic moves in a larger strategic context has given Xi Jinping an opportunity to reset the East,” he added in another post.Bolton, who served as national security adviser (2018-19) under Trump’s first presidency, departed due to disagreements regarding the administration’s foreign policy approach.His observations coincide with New Delhi’s current challenges amid global economic uncertainty, following the US implementation of a 50% tariff on Indian imports, plus an additional 25% due to India’s Russian oil purchases.The statements followed the 25th Shanghai Cooperation Organisation (SCO) Heads of State Council summit in Tianjin, China, where Prime Minister Modi engaged with Russian President Vladimir Putin and Chinese President Xi Jinping in bilateral discussions.According to a Ministry of External Affairs statement on Sunday, Modi and Xi Jinping acknowledged their nations’ roles in maintaining global trade stability during their meeting.In his discussion with Putin, PM Modi highlighted the robust India-Russia relationship, noting their consistent mutual support during challenging periods.The Prime Minister emphasised that collaboration between New Delhi and Moscow remains crucial for international peace, stability and prosperity. Meanwhile, Putin highlighted that this year commemorates the 15th anniversary of the India-Russia ‘Special and Privileged Strategic Partnership’.