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BUSINESS & TRADE SEPTEMBER 19, 2025 | The Indian Eye 42

Festive Cheer and GST Reforms

Set to Rev Up Indian Economy

Slow credit growth dampened sentiment earlier this year, but festive demand

and tax reforms are expected to spark a revival across sectors.

OUR BUREAU CONSUMER DEMAND AS
GROWTH ENGINE
Mumbai / New Delhi
he festive period, which typical-
ndia’s economic momentum, ly accounts for 30-40 per cent
muted in recent months by slug-
Igish credit growth and cautious Tof annual sales for many con-
sumer-facing industries, is expected
consumer sentiment, is poised for a
lift as the twin forces of festive de- to amplify the positive impact of the
tax changes. Retailers, auto dealers,
mand and the government’s new and consumer durable makers are
Goods and Services Tax (GST) re- gearing up for a surge in footfalls as
forms converge. Industry leaders and shoppers return to markets with re-
economists believe this combination newed confidence.
could trigger a turnaround in both Kidwai pointed out that India’s
consumer spending and corporate in-
strength lies in its domestic demand.
vestments, providing a much-needed While global headwinds such as the
boost to growth. U.S. tariff war may hurt export-orient-
According to Reserve Bank of
India (RBI) data, bank credit grew at ed sectors like apparel, leather, and
12.1 per cent in 2024-25, compared jewellery, she argued that bolstering
local consumption would offset much
to 16.3 per cent in the previous year. of the pain. “India is largely a domes-
This slowdown has been widely seen tic-driven economy. If we can pump
as a reflection of weak capital expen- up domestic demand, it can pick up
diture and subdued demand. “Bank from anything that we suffer in terms
credit growth has been slow and
that’s an indication of both the lack- of exports,” she said.
While the immediate boost may
lustre capital expenditure environ- come from Diwali shopping and car
ment and demand being low,” said purchases, analysts say the reforms
Naina Lal Kidwai, Chairperson of will have deeper implications for the
Rothschild and Co India Pvt Ltd, on economy. By rationalising GST rates,
the sidelines of the FICCI LEADS Naina Lal Kidwai, Former President, FICCI, is very optimistic about the government has not only put
event in New Delhi. the Indian economy (ANI File Photo) more money into the hands of con-
Yet Kidwai struck an optimistic
note, highlighting that the upcoming among the first to benefit from the GST self, we are seeing better levels of sumers but also created a clearer path
for businesses to plan investments.
festival season, coupled with GST changes. At the 65th SIAM Annual enquiries at dealerships relative to The renewed demand could set
rate cuts on key consumer goods Convention, Partho Banerjee, Senior August, which shows that consumers off a virtuous cycle: companies utilis-
and automobiles, is set to rekindle Executive Officer of Marketing and are responding to the reforms. With ing idle capacity, stepping up capital
demand. “The good news is that with Sales at Maruti Suzuki, described the Navratri and Diwali around the cor- expenditure, and banks responding
the GST reforms and the festival sea- rate cuts as a “gift” from Prime Min- ner, we expect strong sales momen- with greater lending. This, in turn,
son coming up, there is a very strong ister Narendra Modi to consumers. tum,” he said. may help address India’s twin con-
sense of excitement that demand will “We hope that those who want to MG Motor India also noted that cerns of job creation and industrial
come back,” she said. “When de-
mand picks up, idle capacities will be upgrade to four-wheelers grab this customer sentiment had improved expansion.
For now, however, all eyes are on
opportunity,” Banerjee said. Maruti
sharply. The company, which has
utilised, and companies will begin to has pledged to immediately pass on steadily expanded its share in the the coming months. With consumers
spend more on Capex. That cycle is
exactly what the government has set the benefits of the new GST rates to electric vehicle (EV) market, be- eager to spend, automakers slashing
lieves the timing of reforms will ac-
prices, and the government’s GST re-
customers, not just on car sales but
in motion with the GST reforms.”
also on service parts and labour. celerate adoption further. “EVs are lief putting more cash in circulation, the
AUTO SECTOR LEADS THE Other automakers echoed the already sitting at about 6 per cent festive season of 2025 could mark the
CHARGE sentiment. Anurag Mehrotra, Man- of the passenger vehicle market, up beginning of a much-needed revival.
aging Director of JSW Motor In- from 2.5 per cent last year. Consum- As Kidwai summed up: “The start
he automobile sector, often dia, called the GST rationalisation ers are responding strongly to the of the demand cycle is very critical.
considered a bellwether of a “long-awaited step” for the sector. savings on fuel and running costs,” With GST reforms and the festive sea-
Tconsumer confidence, has been “In the first 10 days of the month it- said Mehrotra. son, India has the right triggers in place.”

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