Analysts see the changes as a potential catalyst for consumption growth while also carefully assessing the fiscal impact.
Goldman Sachs
Global investment firm Goldman Sachs views the GST cuts as a major trigger for India’s consumption revival. Arnab Mitra, India consumer analyst at Goldman Sachs, highlighted that companies could see a reduction of 100 to 1,200 basis points in blended GST rates. On the demand side, the brokerage expects stronger volume growth in the latter half of the year.
Jefferies
Jefferies estimates that the GST cuts could lower tax collections by ₹ 48,000 crore in FY24. For the seven months of FY26, the impact on the Centre and states is expected to be around ₹ 22,000 crore to ₹ 24,000 crore, with strong demand helping to reduce the fiscal effect. The conversion of the GST Cess into GST may also ease pressure in FY27. On inflation, Jefferies expects CPI to drop by about 0.25%, which could lead the RBI to cut rates by 25bps, with a small chance of a 50bps cut.
HSBC
HSBC expects that, along with earlier income tax cuts and lower debt costs from repo rate cuts, the GST changes could boost consumption by 0.6% of GDP. The bank also said headline inflation could fall by about 1% if producers pass the tax benefits on to consumers.
CLSA
CLSA said that the GST reform, together with earlier income tax and interest rate cuts, is likely to boost consumption and reduce working capital needs for SMEs, improving their returns. The main beneficiaries are expected to be auto, FMCG, durables, cement, insurance, quick service restaurants and alcohol companies.
Bernstein
Bernstein said that with the reform effective September 22, companies may take time to adjust existing inventory. While demand for high-penetration items such as entry-level motorcycles may remain muted, discretionary products like air conditioners could see stronger growth. The brokerage also remained cautious on government capital expenditure, focusing instead on the shift toward consumption-led growth.
Citi
Citi estimated that the GST rate cuts could lower inflation by 1.1 percentage points, as the adjustments cover items forming 16% of the CPI basket. The actual impact may be somewhat less due to partial pass-through and input tax credits.
UBS
UBS said that the cement rate cuts are good for sentiment, even if short-term demand stays steady. The GST changes are also ‘positive’ for consumer durables companies like Voltas and Havells, as they could make products more affordable, increase festive-season sales and help clear inventories. With lower inflation and income tax cuts, demand for white goods is expected to gain further momentum.
The international consensus suggests that GST 2.0 could reinforce India’s consumption-driven growth while maintaining fiscal stability, signalling cautious optimism among global investors.
