Page 57 - Banking Finance October 2025

FEATURES

Gross Savings, Less Taxing

T he move to cut GST on a host of regular household more affordable for millions of households, but also signals
a strong commitment to inclusive growth and domestic
staples ahead of the festive season is expected to
lift consumption which had just begun to show some
adding that the move will act as a "powerful catalyst" for
initial signs of recovery after several sluggish quarters. consumption revival," said Mohit Malhotra, CEO at Dabur,
Companies expect demand for products ranging from soaps, demand, especially in rural and semi-urban markets.
shampoos and hair oils to namkeen to get a boost.
Significant rate reductions on items of common use bring
"This is a game changer. Barring sin goods, almost all food much-needed relief to households, while exemptions on food
items are in the 5% tax slab, said Mayank Shah, vice- items help curb classification disputes, reflecting the spirit
president at Parle Products which is betting on the GST of GST 2.0, said Mahesh Jaising, Partner & Indirect Tax
rejigging to generate long-term demand revival. Shah, Leader, Deloitte India.
however, said that while bigger packs will see some price
reduction, in smaller packs, the benefit of tax cuts will be By reducing rates on essentials and electronics, this reform
largely passed on through increase in grammage. is poised to unlock a new wave of consumption, strengthen
investor sentiment, and add meaningful momentum to
The reduction in prices is, however, expected to reflect only growth, added Namit Puri, Managing Director & Senior
Partner at BCG.
on the new stock rolled out in the market, said an industry
expert. For packs that are already on the retail shelves, it
The tax roll out kicks in right at the time of Navratri during
could be a challenge to do re-stickering. The large size packs
which the first leg of festive purchases kick in. Companies
could, however, be sold at discounted prices once the new
had been concerned that a delayed tax implementation
prices kick in after Sept 22, the expert said.
would crimp demand during the crucial Navratri period.
The broader push to consumption comes at a time when
The GST cut on life-saving, cancer, rare disease and chronic
Trump's tariffs risk hurting growth of labour-intensive export
therapies is expected to ease prices of medicines, and make
oriented sectors. Slowdown in segments such as IT and
treatment more affordable. "GST reform is a welcome
gaming had also raised concerns around demand taking a move and a landmark step," Sudarshan Jain, secretary-
hit. The GST cut is a timely and transformative move that general of the Indian Pharmaceutical Alliance told.
will energise consumer sentiment just as India steps into its
vibrant festive season. GST has been reduced from 12% to nil on 33 lifesaving
drugs, and from 5% to nil on three lifesaving drugs used for
It's a confidence booster for consumers and a growth treatment of cancer, rare diseases and other severe chronic
enabler for the FMCG sector. This reform not only makes diseases. On all other medicines, the GST has been lowered
everyday essentials like shampoos, soaps, and toothpastes from 12% to 5%. (Source: Times of India)

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