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GST Cut Fuels Retail Credit Boom
15 Dec
Summary
- GST rationalisation in September boosted affordability and retail credit.
- Vehicle finance and consumer durables saw significant growth.
- Consumer confidence and market optimism have been reignited.
India's retail credit market experienced a significant upswing following the Goods and Services Tax (GST) rationalisation in September 2025. The reduction in GST rates on a wide array of products, estimated at 375 items, directly enhanced the affordability of mass-consumption goods, electronics, and vehicles. This move has been credited with revitalizing consumer sentiment and fostering greater market optimism across the nation.
The positive impact of GST 2.0 is clearly reflected in the robust year-over-year growth observed in key retail segments during the pre-festive period. Specifically, vehicle finance, including two-wheeler and auto loans, along with consumer durables, demonstrated strong incremental gains. This surge in demand for credit signals a renewed confidence among consumers to engage in larger purchases and financial commitments.
Experts suggest that the GST adjustments were a crucial step towards stimulating economic activity, directly contributing to the upward trend in credit demand. To sustain this healthy growth, lenders are encouraged to maintain engagement with consumers through multiple touchpoints, emphasizing financial discipline and responsible borrowing practices.
