GST 2.0 to Redraw India’s Consumption Map: Autos, FMCG, Cement, Pharma, Durables in Spotlight
- 28th August 2025
- 05:30:00 PM
- 3 min read
Summary
Policy Shift Seen Adding 50–70 bps to GDP; Brokerage Highlights Stronger Earnings Visibility for Domestic Demand Sectors
Mumbai | August 28 – India’s much-anticipated GST 2.0 reform has the potential to reset the consumption cycle by lowering prices across essential and discretionary goods. In its India Strategy Report, PL Capital notes that tax rationalisation could deliver a meaningful boost to autos, FMCG, cement, consumer durables, and pharmaceuticals, sectors that collectively drive a large share of India’s growth engine.
Unlike the first wave of GST, which focused on unifying taxes, GST 2.0 is designed to simplify slabs, reduce compliance costs, and improve affordability for consumers. Analysts estimate the move could lift GDP growth by 50–70 basis points and accelerate the earnings cycle for consumption-led companies in FY26.
“GST 2.0 is a timely policy trigger. By reducing effective tax rates in high-demand categories, it enhances affordability and supports volume recovery across sectors that matter most to the consumption economy,” said Amnish Aggarwal, Head of Research, PL Capital.
GST 2.0 Impact on Auto Stocks
The auto sector is expected to see the sharpest demand revival, with two-wheelers and entry-level cars becoming more affordable just as rural incomes recover and the festive season approaches. Stocks such as Maruti Suzuki, Hero MotoCorp, and Mahindra & Mahindra are positioned to capture a quicker sales rebound, marking a turning point for the industry after a prolonged demand slowdown.
Cement Demand Outlook Post GST Cuts
In cement, lower tax incidence is likely to ease construction and housing costs, making projects more viable for both developers and individual buyers. UltraTech Cement, Ambuja Cement, and Shree Cement are expected to gain from stronger infrastructure and housing demand, with GST 2.0 providing a tailwind for the sector’s volume trajectory.
FMCG Sector Set for Consumption Boost
In FMCG, GST 2.0 cuts are expected to fuel consumption across both rural and urban markets, reducing price sensitivity for mass categories while also supporting premiumisation. Leaders such as ITC, Nestle, Britannia, and Hindustan Unilever are seen benefiting from improved volume growth as households stretch their budgets towards packaged food and essentials.
Pharma Benefits from GST Rationalisation
The pharmaceutical sector also stands to benefit from rationalised GST rates on essential medicines, making treatments more affordable and expanding reach in Tier-2 and Tier-3 markets. Companies including Sun Pharma, Dr. Reddy’s, Cipla, and Lupin are expected to add steady domestic growth on top of their export businesses.
Consumer Durables and Stationery Outlook
Consumer durables and stationery products see a structural tailwind, with lower GST slabs boosting affordability in middle-income households. DOMS Industries, Titan, and Whirlpool are among the companies that could see sustained demand gains as affordability improves and penetration widens.
Bottom Line: GST 2.0 as a Consumption Catalyst
GST 2.0 is not just a tax reform; it is a consumption catalyst. By lowering effective prices in both essential and discretionary categories, the policy creates a multiplier effect that benefits consumers, companies, and the broader economy. For investors, it signals a multi-sector opportunity across autos, FMCG, cement, pharma, and durables, each of which stands to see stronger earnings visibility as the reform takes hold.
👉 Read the full India Strategy Report here
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
