Sustaining Festive Season Demand Trend to Depend on Broader Economic Condition: ICRA

Festive season trends point to a rebound in demand, especially for consumer durables, as GST rate cuts have eased the tax burden for consumers, but its sustainment will depend on broader economic conditions and industry-specific dynamics in the quarters ahead, ICRA said on Monday.

Since its rollout in 2017, Goods and Services Tax (GST) has undergone several rate adjustments, culminating in a major restructuring in September 2025. The 'GST 2.0', rolled out from September 22, has brought in substantial rate cuts across a wide range of goods and services.

ICRA said this overhaul aims to make consumer prices more affordable, reduce operational costs for businesses, and stimulate demand across sectors such as essentials, housing materials, automobiles, and services and improving affordability across key sectors.

"Festive season trends and early indicators validate these benefits, pointing to a rebound in demand, especially for consumer durables. However, sustaining the same will depend on broader economic conditions and industry-specific dynamics in the quarters ahead," ICRA noted.

Boosted by stocking ahead of the GST-rationalisation fueled demand during the festive season, the expansion in manufacturing output accelerated in September 2025, with the production of consumer durables undergoing a prominent sequential and YoY uptick.

The combination of GST rate rejig, pent-up demand and the early festive onset appears to have boosted demand in September-October 2025, which is expected to augur well for the growth in manufacturing output in October 2025 as well.

While the GST rationalisation may support demand for regular use/small-ticket items after the festive season, the sustenance of the buoyancy in demand for big-ticket items remains to be seen.

ICRA said the combination of GST rate rationalisation, pent-up demand and the early festive onset appears to have boosted demand in September-October 2025, which is expected to augur well for the growth in manufacturing output in October 2025 as well.

While the GST rationalisation may support demand for regular use/small-ticket items after the festive season, the sustenance of the buoyancy in demand for big-ticket items remains to be seen, in ICRA’s view.

The credit card transaction data for October 2025 will only be available by end-November 2025. Further, the data on GST collected in November for October transactions will be available on December 1, 2025. These data points would provide greater clarity around the buoyancy in consumption trends in October 2025.