From showrooms to shelves, India likely to witness consumption uptick

Godrej Consumer Products also expects demand to rise for categories like personal care and home care

India’s consumption engine is expected to rev up in the coming months, with fast-moving consumer goods (FMCG), consumer durables and automotive sectors poised for higher demand. A combination of factors — the income-tax relief, a cumulative 100-basis-point rate cut by the Reserve Bank of India (RBI) since the start of 2025, and expectations of a strong monsoon — is likely to lift sentiment across urban and rural markets.

 

In the FMCG space, firms are projecting double-digit growth, supported by stable agricultural produce prices and more money consumers’ hands. “All initiatives taken by the government are positive for consumption. There will be higher discretionary spends, and demand across both rural and urban markets is expected to be strong. This will drive double-digit growth for the rest of the financial year,” Mayank Shah, vice-president at Parle Products, told Business Standard.

 

Lauding the RBI’s policy decisions, Tarun Arora, chief executive officer at Zydus Wellness, said: “This will enhance consumers’ purchasing power as cheaper credit frees up disposable income and encourages spending. Given that the central government has recently given relief in income tax, these (measures) together will further fuel consumption and optimism, and hopefully will translate into strengthening of economic momentum.”  In the FMCG sector, he further said, rising consumer confidence and improved affordability shall directly translate into higher demand for daily essentials.

 

Godrej Consumer Products echoed this outlook, expecting increased demand in personal and home care segments.  

 

“The RBI’s rate cuts aim to boost economic activity by making borrowing more affordable and increasing disposable income. This monetary easing presents a strong opportunity for the FMCG sector, driving fresh investments and revitalising the consumption cycle,” said Krishna Khatwani, head of sales at Godrej Consumer Products. “With inflation within the RBI’s target range, consumer confidence in discretionary spending is likely to rise.” 

 

In consumer durables, a sector that has lagged this year due to weak seasonal sales, the expectation of a turnaround is growing. “Capex spending will increase when liquidity improves and home loan burdens will also ease which will bring consumers back to the market. Income-tax rebates will add to the relief. These factors will drive demand across both B2B (business-to-business) and B2C (business-to-consumer) markets,” said B Thiagarajan, managing director, Blue Star. While sales of appliances like air conditioners and refrigerators struggled this summer, he expects the upcoming festival season to deliver a demand boost.

 

Avneet Singh Marwah, chief executive at Super Plastronics, said the first half of 2025 had been difficult for the sector. “Most big-ticket items priced above ~10,000-15,000 are bought through EMIs (equated monthly instalments). The government is working to ease the pressure and revive sentiment. Domestic demand should improve,” he said.

 

Automakers, too, are optimistic that the RBI’s cumulative repo rate cut of 100 basis points (bps) — 25 bps in February, 25 bps in April, and 50 bps in June — will spur demand in the entry and mid-tier vehicle segments. “Such reductions in the repo rate will have a positive impact on the auto sector because it will lead to increased accessibility to finance at reduced costs, thereby triggering positive sentiment among consumers,” said Shailesh Chandra, president of the Society of Indian Automobile Manufacturers (Siam), and managing director of Tata Passenger Vehicles and Tata Passenger Electric Mobility.

 

Venkatram Mamillapalle, CEO and managing director of Renault India, said the RBI’s policy decisions would enhance financing access, especially for budget-conscious buyers. The reduction in retail inflation forecast to 3.7 per cent for FY26 “will likely increase real disposable income, supporting consumer sentiment”, he said.

 

With private consumption already on a firm footing and the festival season on the horizon, auto dealers anticipate additional tailwinds. “The India Meteorological Department’s revised monsoon forecast — at 106 per cent of the long-period average — suggests stronger rural liquidity and farm incomes, which should support demand for two-wheelers and tractors in semi-urban and rural areas,” the Federation of Automobile Dealers Associations (Fada) said.

 

Automobile retail sales grew 5 per cent in May year-on-year, helped by weddings, healthy harvest and rural demand, said the group representing dealers. This was even as passenger vehicle (PV) sales dipped 3 per cent to 302,214 units due to the India-Pakistan conflict earlier that month. Retail pickups of construction equipment vehicles slipped 6.3 per cent, and those of commercial vehicles declined 3.7 per cent.

 

On the other hand, two-wheeler sales increased 7.3 per cent in May; three-wheelers and tractors witnessed 6.2 per cent and 2.7 per cent year-on-year uptick, respectively.