After muted start, GST cuts boost consumer durables demand in 2025

The consumer durables industry had a year worth remembering.

 

Even as 2025 started off slow with the summer season cut short by prolonged monsoon, slashing of the goods and services tax (GST) rates provided the industry the much-needed relief.

 

Cooling appliance makers had started the year with high hopes, but an early arrival of monsoon splashed away their enthusiasm.

 

For air conditioner (AC) major, Voltas, the year began on a positive note despite the high base of summer 2024.

 

However, high temperatures were not reached in many parts of the country. This affected demand in the peak season. 

“The year 2025 began with a great deal of optimism for us. As a cooling category player, we had delivered an exceptionally strong performance in 2024, so expectations were high… However, as we moved into April and May, the situation changed significantly. The summer was highly erratic, with intermittent rain,” Mukundan Menon, managing director (MD) at Voltas told Business Standard. 

 

Menon said this caused a rise in inventory of raw materials and finished goods for companies. 

 

He added, “I believe the worst is now behind us. Looking ahead, the outlook is much more positive. The upcoming summer, along with the GST trigger, should be supportive, and we are confident that business conditions will improve from here.” 

 

For Bluestar, the inclement weather led to a degrowth in the June quarter.

 

“We saw 51 per cent growth in the first quarter last year and were expecting a 20-25 per cent increase on that base. However, there is an excess of almost two million air conditioner units in the market as dealers had bought more anticipating shortage. The inventory has piled up and we can expect a degrowth of 25-30 per cent this quarter,” said B Thiagarajan, MD, Bluestar. 

 

Thiagarajan later said the cooling appliances industry witnessed degrowth of 15 per cent during the year on account of inclement weather conditions.

 

In September, however, new GST rates were announced by Finance Minister Nirmala Sitharaman. Under the new regime, LCD and LED television sets over 32 inches, ACs and dishwashers moved to the 18 per cent slab from 28 per cent earlier.

 

While transition to the new slab took time, appliance manufacturers and retailers said the move has helped boost demand.

 

“Due to the reciprocal tariff by the US, the industry had a negative outlook. India was among the worst-affected Asian countries. The GST rate cuts helped revive consumer spending, especially on TVs and ACs, which are still perceived as luxury, making them more accessible,” JB Park, president and chief executive officer (CEO), Samsung, southwest Asia, said at a recent round table. 

 

At Samsung, “Volumes rose by double-digits during the festival season, while AC and TV volumes specifically rose triple-digit during the season,” he further said.

 

“The year 2025 has been a defining year for premium home appliances in India, driven by category creation and an aspiration-led shift in consumption. Dishwashers emerged as the breakout category with over 40 per cent pan-Indian growth and our highest-ever festival sales,” said Saif Khan, MD & CEO, BSH Home Appliances, which has a 53 per cent market in the category.

 

“The GST reduction from 28 per cent to 18 per cent acted as a key catalyst for dishwasher adoption, accelerating demand for hygiene-focused, water-efficient solutions,” he added.

 

However, prevailing macroeconomic conditions led to component shortages and rising commodity prices. High inflation rates have impacted sentiment and the industry has seen a slowdown in the last one year.

 

“This year, the durables industry at large has been witnessing a relative slowdown in consumption, driven by environmental and macroeconomic factors,” said Kamal Nandi, business head and executive vice-president, appliances business, Godrej Enterprises Group.

 

The GST reduction on ACs was a big announcement for the industry. On one hand, its early announcement in August slowed down sales till the festival. But on the other hand, it got a boost at the onset of the festival season, Nandi pointed out.

 

“Despite the degrowth, Godrej maintained double-digit growth, leading with washing machines, followed by air conditioners and refrigerators. While the growth is the highest in big cities for refrigerators, for other categories like AC and washing machines, both large cities and rural markets have shown good growth,” he said.

 

TV makers, however, witnessed a blockbuster year, supported by the GST rate cuts.

 

“The category did especially well because consumers have anyway been moving towards larger screens. Rate cuts on this specific segment further bolstered demand,” said an executive.

 

New categories have also emerged. Air purifiers are fast becoming a significant revenue generator for retailers, albeit for a few months of the year.

 

At e-commerce major Amazon India, demand for the product during November has seen a fivefold increase compared to typical days, said K N Srikanth, director, home, kitchen, and outdoors category, Amazon India.