GST Bonanza, Big Discounts: India’s Festive Season Might Get a Glow-up Like Never Before

India’s grand festive season is here! Starting today, the festive fervour kicks in with full swing, bringing months of celebrations from Dussehra to Diwali, right till Christmas & the New Year. 

But, beyond the lights, sweets, and shopping sprees, the festive period is a major economic event with retail businesses often earning a huge chunk of their annual revenue.

This year comes with an extra reason for cheer: the big GST tax rate cuts, or as Prime Minister Narendra Modi recently put it, ‘Bachat Utsav’, simplifying four tax slabs down to just two (5% and 18%), along with a 40% tax on ultra-luxury and ‘sin’ goods. The tax revamp is aimed at making a range of goods more affordable, from appliances and electronics to cars, potentially fuelling even more spending.

The Numbers Tell a Compelling Story

India’s festive e-commerce sales are projected to hit a staggering ₹1.15-1.20 lakh crore this season, representing a robust 20-25% year-over-year growth, thanks to repo rate cuts, higher disposable income limits, rural demand, and other pent-up demand across appliances and home categories. That’s nearly double last year’s growth pace and marks what could be the strongest festive performance for e-commerce in the last five years, according to Redseer Strategy Consultants Report.

Note: The festive period considered here spans from 30-35 days before Diwali for year-on-year growth; Source: Redseer Research & Analysis

 The growth story extends far beyond just online sales. Urban households alone are expected to spend ₹2.19 lakh crore during the September-November festive period, an 18% jump from last year. Even more telling, 37% of urban families plan to spend over ₹20,000 this festive season, up from just 26% in 2024, as per a survey by LocalCircles.

All signs point to the 2025 festive season being one of the strongest in years.

The Demand Drivers this Year

What’s different about this festive season? Several positive trends are aligning to supercharge consumer demand in late 2025. 

The GST Revolution: Starting today, India’s tax structure has been simplified with over 400 products becoming cheaper. Everything from your morning bread and milk to air conditioners, washing machines, and even hatchbacks and compact sedans will cost less. Several companies across categories have already announced heavy discounts ahead of the festivities to rake in consumers. Industry watchers expect the tax relief to unlock a wave of pent-up demand by improving affordability across the board.

Credit-fuelled Spending Boom: After a dip last year, credit and debit card spending on e-commerce rebounded ~20% YoY by March 2025 and has stayed in double-digit growth since, as per the Datum Intelligence Report. The  “Buy Now, Pay Later” (BNPL) services are surging in popularity too, letting shoppers split big purchases into EMIs with minimal hassle. The easy availability of EMIs, no-cost finance offers, and cashback deals is enabling consumers, especially younger buyers, to afford goods that might have been out of reach upfront. 

Interest Rate Relief: Borrowing has become cheaper. After the US Federal Reserve and the Reserve Bank of India both cut rates this year, banks quickly cut lending rates across home, auto, and personal loans. The repo rate has declined from 6.5% to 5.25%, making big-ticket purchases more affordable through easier financing. This is particularly crucial for appliances and automobiles, where EMI affordability drives purchase decisions.

Urban “Premiumisation” Trend: In India, consumers aren’t just buying more, they’re buying better. There’s a clear shift toward premium products, from luxury cars to high-end electronics, as aspirational buyers look to upgrade their lifestyles. Anticipating this, according to a report, companies have ramped up production of premium models by 10–20% for the festive quarter, even as entry-level output stays flat. Notably, the GST cuts also favour premium buyers (e.g., high-end TVs and appliances moving to lower tax brackets), which could nudge more people to splurge on that “next level” purchase.

Rural Renaissance: Perhaps most importantly, rural India is experiencing an income boom. An above-normal monsoon and healthy harvests have boosted farm incomes, and government support programs plus wage growth have put more disposable income in their pockets. A recent survey by Datum shows that over half of rural households (54.7%) reported increasing non-essential spending this year, and an overwhelming 73% expect to spend more in the coming 12 months. This bodes well for festive purchase categories like two-wheelers, affordable smartphones, and FMCG goods in the countryside.

E-commerce vs Quick Commerce

For some time now, India’s consumer behaviour has been undergoing a dramatic shift. Urban households planning to shop primarily online are expected to jump by 115%. The convenience, variety, and competitive pricing of online marketplaces, combined with GST-induced price cuts, are making digital shopping irresistible.

E-commerce giants like Amazon and Flipkart kicked off their mega sale events and will run them right through late October. These month-long online fests (the “Great Indian Festival”, “Big Billion Days”, etc.) have become cultural phenomena, driving record order volumes each year. Industry reports predict online festive sales will exceed ₹1.2 lakh crore this year, up ~27% from 2024’s level.

What’s fuelling it? Generous discounts, new product launches, and a wider digital shopper base are part of it, but also the rise of new models like quick commerce. 

Quick commerce is experiencing explosive growth, expanding by 150% year-over-year in the pre-festive period, according to the Redseer report. Platforms like Blinkit, Zepto, and Swiggy Instamart’s share of online festive spend may jump to ~12% (from 8% last year), as consumers get used to ordering last-minute items for same-hour delivery, beyond groceries to festive gifting, beauty, and more.

All told, online retailers are expecting their biggest festive season in years, and are scaling up logistics accordingly (for example, Amazon opened 12 new fulfilment centres across major cities just ahead of the season).

Sectors Likely to Shine

With these powerful demand drivers in play, which sectors are poised to benefit the most from the festive boom? 

Automobiles (especially EVs and SUVs): The auto sector often enjoys a sales bonanza during festivals, as many Indians consider it auspicious to buy vehicles around Dussehra/Diwali. The GST rate cut plays a huge role here. Automakers like Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Hyundai, and more have already announced price cuts (up to ₹2 lakh on some models) to pass on the savings to customers. Notably, 2025 is set to be one of the busiest EV launch seasons ever, with a slew of new electric SUVs, cars, and even premium bikes hitting the market during August–November.

FMCG & Retail: Festivals drive higher sales of everything from food and beverages (think sweets, snacks, and celebratory groceries) to personal care products and apparel. Market analyst estimates the GST cuts could spark an additional $13 billion (~₹1 lakh crore) in consumption, giving a strong boost to the FMCG sector. Categories like fashion and home décor typically see 30–40% of their annual sales during festive months, and this year should bring a similar surge.

Jewellery & Gold: The festive period (and the ensuing wedding season) is a traditional boom time for jewellers. Gold and jewellery demand usually peaks in Q3 each year due to occasions like Dhanteras and the multitude of weddings following Diwali. Even with gold prices near record highs in 2025, the World Gold Council notes that October–December could see strengthened gold demand, helped by weddings and investment interest, as well as a general consumption lift from the tax cuts. 

Deep Dive

• Early signs are positive: gold imports jumped in late summer, and bullion dealers started stocking up in anticipation of festive buying.
• Large jewellery chains are reporting higher store footfalls thanks to aggressive promotions and exchange schemes (old gold swap for new). 
• In value terms, wedding and festive purchases account for well over half of India’s annual gold jewellery demand in a typical year, underlining how critical this season is for the sector. 

E-commerce & Logistics: As discussed, e-commerce is set for an unprecedented festive haul this year, which in turn lifts the entire ecosystem of logistics, delivery, and warehousing. The result is that third-party logistics (3PL) providers, trucking companies, and parcel delivery startups all stand to benefit from the higher shipment count. Given that this festive season is projected to be the busiest ever for online retail, the logistics and e-commerce services industry is likely to post strong growth.

BFSI (Banking, Financial Services & Insurance): Banks and lenders see higher credit demand as people finance cars, homes, and gadgets. Payment providers and fintechs gain from the surge in UPI, card, and BNPL transactions. And for insurers, GST exemption on life and health premiums makes policies cheaper and more attractive.

Investor Takeaways

For investors, India’s festive season is more than just a few merry months; it often marks a pivotal point in corporate performance. 

Many retailers, auto companies, and FMCG firms similarly report their best sales in the festive quarter, which can boost their stock performance (as markets typically price in upbeat earnings). The upcoming 2025 festive upswing could therefore bode well for the Q3 FY2026 results of these companies.

However, picking individual winners can be tricky; not every company will capitalise equally, and some might struggle with thin margins due to heavy discounting. A more prudent approach for retail investors is to consider theme-based, diversified investments that capture the broad trend. 

For instance, rather than trying to guess which single automaker or retailer will outperform, one could invest in a basket of stocks tied to India’s consumption story (spanning autos, banks, FMCG, retail, e-commerce, and so on). Such diversified thematic portfolios help spread risk while letting you ride the overall festive wave in the economy. 

If you are interested to know more about strategic investment around sectors or themes that benefit from the recent GST reforms, check out this GST 2.0 smallcase collection.

You can also check out other model portfolios based on your investment style and purpose here.

To Wrap up

As the days get lit (literally and otherwise) and the shopping carts fill up, the festive season is a reflection of India’s economic momentum and the confidence of its consumers. The convergence of rising incomes and supportive policies is creating a festive boom that highlights the consumption-driven nature of the economy. 

For investors, we have one message: The key is to partake in the opportunity with discipline: enjoy the short-term boost but stay focused on your long-term financial goals. 

That said, happy investing and happy festivities!

Disclaimer: This analysis is for educational purposes and does not constitute investment advice. Market conditions can change, and past performance is not indicative of future results. Investors should conduct their own research and/or consult a certified financial advisor before making investment decisions.