India’s consumption story is finally showing signs of picking up—from vehicle sales to consumer goods—propped up by the GST rate cuts and the ongoing festive fervour. However, to support the economy amid global uncertainties, India needs a sustained recovery in consumption.
Passenger vehicle sales have jumped 21.6% year-on-year over the previous two months, with the trend particularly striking for two-wheelers, according to data from the transport ministry’s Vahan portal that tracks vehicle registrations.
Sales of two-wheeler vehicles—seen as a proxy for gauging demand at the lower end of the income spectrum—zoomed 46% y-o-y till 14 October. On the other hand, car sales rose 19.2% y-o-y as buyers timed their car and two-wheeler purchases with new GST rates that kicked in with Navratri (22 September to 2 October).
The broader auto sector—which includes trucks, buses, tractors, and autorickshaws—also witnessed robust sales during Navratri.
Auto sales as a whole rose 35% y-o-y during Navratri, according to data from the Federation of Automobile Dealers Associations, which tracks retail sales of vehicles from stores. Dealerships nationwide witnessed strong deliveries, with retail sales of both two-wheelers and cars surging 35-36%, marking a high for any festive season, the data showed.
During last year’s Navratri, growth in passenger vehicle sales was 13-15%.
“The pick-up in consumer durable consumption is definitely attributable to GST cuts, with producers passing on the benefits to consumers,” said Gaura Sen Gupta, chief economist at IDFC FIRST Bank. “The indicators are showing a stronger pick-up, over and above the usual festival boost.”
Mindful consumption growth
Sales of fast-moving consumer goods also registered significant volume growth this Navratri season across almost all categories.
Data from market intelligence firm Bizom shows that overall FMCG sales posted a stupendous 43% y-o-y growth by volume. Segments such as packaged foods (48%) and dairy products (36%) showed strong growth momentum.
Traditionally, festivals are associated with ‘binge eating’ and pampering one’s taste buds. However, Bizom data indicates that Indians are being mindful about their diets this year.
Beverages—traditionally a festive staple—saw demand soften, with volume growth dropping to 2% during Navratri from 28% last year. Personal care products, on the other hand, saw volume growth of 74% y-o-y.
“It’s not that Indians have stopped celebrating; instead, they are curbing excess, making careful choices, and opting for lighter, healthier sips, and more purposeful splurges,” Bizom said.
The GST cuts effect
Overall consumer spending is holding up well, as seen in transactions trends on the Unified Payments Interface (UPI)—a high-frequency indicator. The average daily UPI transaction volume stood at 680.6 million in October, the highest for the month in three years.
A merchant category-wise break-up for September, indicative of spending habits, shows categories such as online marketplaces, alcohol, clothing, and confectionery registered higher transaction volumes.
“These trends prima facie do indicate that consumption has picked up due to the GST factor,” said Madan Sabnavis, chief economist at Bank of Baroda.
He, however, added that this could also be indicative of bunching up of spending towards the end of September after GST cuts became effective. “While the present trends are strongly positive, their maintenance in future would be the clue to the sustainability of the consumption spiral,” Sabnavis said.