How will the GST rate cuts impact India's FMCG firms?

The GST on personal care and home care items like soaps, shampoos, and toothpaste has been reduced from 12%/18% to 5%, providing immediate pricing support for FMCG firms and allowing them to maintain a larger portion of the gross price charged to consumers.

Which apparel and footwear retailers are expected to benefit the most from the GST changes?

Retailers like Trent, Aditya Birla Lifestyle Brands, and Aditya Birla Fashion and Retail are expected to benefit, as a larger share of their products fall within the ₹1,000 to ₹2,500 price range, which now has a 5% GST.

How will the GST cuts impact India's quick-service restaurant (QSR) industry?

QSR firms are expected to see an immediate boost to their gross margins, as the GST on inputs like cheese, packaging materials, and condiments has been reduced. Jubilant, a leading QSR player, is expected to see the most significant improvement, with an estimated 70-80 basis points increase in gross margins.

Home / Business and Economy / GST Cuts Aim to Stimulate India's Economy with Sector-Wide Benefits

GST Cuts Aim to Stimulate India's Economy with Sector-Wide Benefits

6 Sep

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Summary

GST rate cuts on personal care, home goods, and apparel/footwear
QSRs expected to see improved gross margins
Grocery retailers and quick commerce firms poised to benefit

GST Cuts Aim to Stimulate India's Economy with Sector-Wide Benefits

According to a recent report by global financial services firm Bernstein, the sweeping GST rate cuts approved by India's GST Council are poised to provide a significant boost to the country's consumption. The changes, which will come into effect on September 22, 2025, are aimed at reducing the tax burden on citizens while stimulating economic growth.

The key highlights of the GST rate rationalization include a reduction in the tax on personal care and home care items, such as soaps, shampoos, and toothpaste, from 12%/18% to 5%. This is expected to provide immediate pricing support for FMCG firms, allowing them to maintain a larger portion of the gross price charged to consumers. In the medium term, the lower tax could also drive demand through higher product grammage or increased consumer wallet share.

The GST on apparel and footwear products has also been streamlined. For items priced between ₹1,000 and ₹2,500, the GST has been set at 5%, while products above ₹2,500 will now be taxed at 18%, up from the previous 12%. This change is seen as marginally positive for retailers like Trent, Aditya Birla Lifestyle Brands, and Aditya Birla Fashion and Retail, as a larger share of their products fall within the ₹1,000 to ₹2,500 range.

Quick-service restaurant (QSR) firms are also expected to benefit from the GST rate cuts, particularly on inputs like cheese, packaging materials, and condiments. Since QSRs do not receive input tax credits, the reduced GST on these items will immediately impact their gross margins. Jubilant, a leading QSR player, is expected to see the most significant improvement, with an estimated 70-80 basis points increase in gross margins.

Overall, the GST rate rationalization is poised to provide a much-needed boost to India's consumption, with sectors like footwear, QSRs, FMCG, and grocery retailers set to reap the rewards.

Disclaimer: This story has been auto-aggregated and auto-summarised by a computer program. This story has not been edited or created by the Feedzop team.