India’s factory output index reflected a spurt in "consumer durables" production during September, due to pent-up demand caused by GST cuts announced during the same month, say economists.
But some feel this is a temporary rise, and from January 2026 onwards, the impact of tax cuts on stimulating consumption, and thereby growth would fade.
According to the IIP data, released on October 28, the year-on-year output growth of consumer durables (carrying a weight of 12.8 percent in IIP), rose to a 10-month high of 10.2 percent in September 2025.
Consumer durables, as per IIP, are defined as products directly used by consumers and having a longer durability, typically considered to be more than two to three years. Passenger cars, two-wheelers, ACs, TV sets, refrigerators are classified as consumer durables.
In the current IIP series, with base year 2011-12, this is only the second time September month recorded consumer durables production growth at a rate above 10 percent. Last time, in 2016, September had recorded a 10.3 percent growth in consumer durables.
On a month-on-month basis, consumer durables production soared by 9.1 percent – at the highest rate witnessed in the past 30 months or since March 2023.
“A rise in sequential trends in production reflect the inventory build-up in anticipation of GST relief and seasonal festive period, led by consumer goods,” said Radhika Rao, Senior Economist, DBS Bank.
“We expect indirect tax relief and festivities to add to near-term buoyancy in production trends,” said Rao.
Anitha Rangan, Chief Economist, RBL Bank said: “Urban growth had been slowing over the last one year and this (GST cuts) provided a necessary boost. From the rural side too, we see a positive momentum from high frequency indicators led by positive crop outcomes.”
Auto, electronics sales soar post cuts
As per data shared by finance ministry sources, earlier this month, India’s automobile sector saw its best Navratri performance in a decade. According to Federation of Automobile Dealers Associations (FADA), the auto industry recorded a 34% year-on-year growth in Navratri sales, its highest-ever performance.
Maruti Suzuki doubled its sales from last year, delivering 1.65 lakh cars in just eight days. And Mahindra & Mahindra saw a 60% surge in SUV sales.
Since the GST cuts on September 22, sales of televisions, refrigerators, and washing machines have seen a massive rise, the ministry sources said. “Overall consumer durable sales jumped 40–45%, led by premium product categories,” they said.
Growth uneven across sectors
Radhika Piplani, Chief Economist, Motilal Oswal Financial Services, however said that the GST cuts—effective from September 22nd—had a positive impact across sectors but some have benefited more than others. "For instance, auto sector demand is strong but footwear and apparel demand is not-as-per expectations of the businesses."
"Therefore, despite being at 10-month high, we believe consumer durables growth would moderate in Q4FY26," said Piplani.
MOFSL has projected GDP growth in FY26 at 6.8 percent, and DBS has pegged it at 6.7 percent. The RBI has projected the full year’s FY26 growth at 6.8 percent.
Gaura Sen Gupta, Chief Economist, IDFC FIRST Bank expects H2 FY26 growth to get a boost by about 0.3 percentage points owing to GST cuts. For full year, she has pegged the growth rate at 6.6 percent, 20 basis points (bps) lower than RBI’s estimate, due to the impact of high 50 percent US tariffs.
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