From FMCG to air conditioners: Sector-wise impact of GST reforms

FMCG, cement, agriculture and other sector companies will be in focus post GST refoms; check all details

As the GST Council, chaired by Finance Minister Nirmala Sitharaman, on September 3, 2025, approved a simplified two-tier rate structure, removing the 12 per cent and 28 per cent slabs, analysts believe markets have largely factored in the overhaul.  "Much of the immediate upside is already priced in, said Kranthi Bathini, director- equity strategy, WealthMills Securities, signalling that further moves will be stock-specific rather than market-wide. He expects consumer-facing names — particularly FMCG and cement — to be the primary beneficiaries, while autos may see a mixed outcome as tax cuts for entry-level models are offset by higher levies on premium vehicles. Agriculture-related companies will also benefit, Bathini added.  Bathini is upbeat on FMCG and cement sector as the sector have been in a consolidation phase. He is also bullish on agriculture related stocks.  On similar note, a report by JM Financial Institutional Securities said, "We believe that the markets were already positioned in favour of consumption since the announcement of the rate rationalisation in GST on August 15, however incremental move away from capex oriented sectors cannot be ruled out."  The brokerage is 'Overweight' on consumption stocks and believes prima facie, based on the current salience of product segments which have seen reductions – Britannia, Colgate, Nestle, Dabur, Bikaji, DOMS should see maximum benefit.   Meanwhile, Ninad Jadhav, equity research analyst, LKP Securities believes most sectors, including FMCG and autos, remain attractive after a prolonged consolidation. The policy is a meaningful positive for the economy, but its impact will play out over the long term rather than immediately.  "From an investment perspective, investors should adopt a selective and staggered approach rather than chasing short-term rallies. Earnings growth will be the key driver, so keeping an eye on quarterly results and demand trends is essential. Overall, investors with a medium to long-term horizon can continue to accumulate quality names on dips rather than booking profits aggressively on every rally," Jadhav said.     ALSO READ | GST Council clears 2-slab system: Full list of items under 5% and nil rates      The revised rates come into force on 22 September. Opposition-ruled states have raised concerns about the absence of a clear compensation mechanism for an estimated revenue shortfall of about ₹48,000 crore.

Sector-wise impact of GST reforms

FMCG

Under the revised regime, with 5 per cent and 18 per cent slabs, will provide relief to the fast-moving consumer goods (FMCG) sector. Everyday items such as soap, toothbrushes, hair oil, namkeen, instant noodles, chocolates and instant coffee will attract 5 per cent GST. Bread, paneer and ultra-high-temperature processed milk will be exempt. 

 

Companies in focus include Hindustan Unilever, Nestlé India, Britannia, Godrej Consumer Products and Tata Consumer Products.

Electronics and home appliances

Air conditioners, televisions and other electronic goods move to 18 per cent from 28 per cent, offering relief to makers such as Blue Star, Crompton Greaves, Voltas and Havells.

Sin goods

Products such as pan masala, cigars, cigarettes and other manufactured tobacco items will attract higher levies in the 28–40 per cent band, affecting firms such as Godfrey Phillips, ITC and VST Industries.

Automobiles

Small cars, buses, trucks, ambulances, motorcycles below 350cc and three-wheelers will see GST cut to 18 per cent from 28 per cent. Conversely, mid- and large-sized cars and motorcycles above 350cc will be taxed at 40 per cent. Key names include Tata Motors, TVS Motor, Bajaj Auto and M&M.  ALSO READ | Nomura bets on Waaree, Premier as Indian solar capacity to grow 3x by 2030

Pharmaceuticals and healthcare

A raft of life-saving and critical medicines — including cancer and rare-disease drugs and 33 other essential drugs — have been moved to the nil slab from 12 per cent. Many hospital consumables such as gauze, bandages and dressings have been placed in the 5 per cent bracket. Companies to watch include Cipla, Sun Pharma, Aurobindo Pharma and Glenmark.

Insurance

All individual life and health insurance policies will be exempt from GST (previously 18 per cent). Group insurance will continue to attract 18 per cent. Major insurers include LIC, HDFC Life, ICICI Prudential Life and SBI Life.

Agriculture and renewables

Handicrafts and agriculture-related goods, including tractors and composting machines, have been moved from 12 per cent to 5 per cent. Renewable-energy equipment such as biogas plants and windmills will also attract 5 per cent GST. Names in focus include Kaveri Seeds, Coromandel International, Inox Wind, Adani Green and Tata Power.

Cement

GST on cement has been cut from 28 per cent to 18 per cent, benefiting producers such as UltraTech Cement, Shree Cement, Ambuja Cement and JK Cement.