Sweeping reductions in Goods and Services Tax (GST) rates are poised to inject fresh momentum into India’s consumption-driven economy, according to a report by global financial services firm Bernstein. The most dramatic shift comes in the personal and home care segment, where GST on essentials like soaps, shampoos, hair oil, powders, and toothpaste has been slashed from 12–18 percent to just 5 percent. This move allows fast-moving consumer goods (FMCG) companies to retain a larger share of consumer spending, potentially driving demand through larger product packs or freeing up disposable income for other purchases.
Retailers such as DMart, Vishal Mega Mart, and Star (part of Trent), along with quick-commerce platforms, are expected to benefit significantly. Apparel and footwear sectors also see major revisions. Previously, items priced below Rs 1,000 attracted 5 percent GST, while those above were taxed at 12 or 18 percent depending on category. Now, apparel and footwear priced between Rs 1,000 and Rs 2,500 will be taxed at only 5 percent. Apparel priced above Rs 2,500 will face 18 percent GST, up from 12 percent, while footwear above Rs 2,500 remains at 18 percent.
Trent, which earns roughly 30 percent of its revenue from products priced above Rs 1,000, stands to gain. Aditya Birla Lifestyle Brands Limited and ABFRL are also expected to benefit, as many of their offerings fall within the revised brackets. Footwear retailers including Liberty, Campus, and Metro will see direct impact from the new structure.
Quick-service restaurants (QSRs) emerge as another major beneficiary. GST on key inputs such as cheese, butter, ghee, margarine, sauces, and packaging materials has been reduced. Since QSRs do not receive input tax credit, any GST on inputs directly adds to operational costs. The rate cuts therefore translate into immediate margin improvements for the sector.
