What fiscal measures did the Indian government implement to stimulate consumption?

The government implemented a moderation of income tax rates and a subsequent GST rate reduction.

Why have defence stocks seen a significant rise recently?

Defence stocks have risen due to geopolitical events like Operation Sindoor, the Russia-Ukraine war, and Middle East instability.

How have GST rate reductions impacted the Indian economy?

GST rate reductions have provided a near-term boost to demand in sectors such as automobiles and manufacturing, with potential for long-term earnings growth.

Home / Business and Economy / GST Reduction Sparks Demand; Geopolitics Boost Defence

GST Reduction Sparks Demand; Geopolitics Boost Defence

27 Dec, 2025

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Summary

Fiscal measures, including tax rate moderation and GST cuts, stimulated consumption.
GST reductions provided an immediate demand boost across key sectors.
Geopolitical events fueled a 17% rise in defence stocks despite market volatility.

GST Reduction Sparks Demand; Geopolitics Boost Defence

To invigorate the economy, the government enacted fiscal policies that included moderating income tax rates and subsequently reducing the Goods and Services Tax (GST). These strategic GST reductions have successfully stimulated demand across crucial sectors, including automotive, consumer goods, and manufacturing, offering a tangible short-term uplift.

Brokerages anticipate that these GST cuts may also foster sustained earnings growth over the long term. Concurrently, the defence sector has experienced a notable surge, with its index climbing 17% despite a generally volatile year for equities. This rise is directly attributed to a series of significant geopolitical events that have drawn investor attention to defence stocks.