GST cuts boost Diwali shopping! Small businesses see festive cheer; here’s what experts say

across the country are seeing a welcome boost in sales, thanks to recent and the upcoming .

Industry bodies said that sectors like toys, textiles, footwear, and auto accessories have reported stronger demand.

The ministry of micro, small and medium enterprises (MSMEs) is keeping a close watch and is expected to conduct a review soon.


A senior official told ET, “We are keeping a tab on developments post Goods and Services Tax (GST) concession implementation. The initial feedback from MSMEs has been positive across sectors, but it's too early to say anything conclusively.”

Last month, the government moved to a two-slab GST system of 5% and 18%, lowering tax rates on many household items, consumer durables, and automobiles. This gave small businesses a much-needed push, with many reporting robust order books.

Rakesh Chabhra, president of Rai Industries Association, said auto accessories such as seat covers and mats have seen a rise in demand, “with demand expected to rise by 20-25% in the coming six months as GST rate rationalisation has brought them in the lower tax slab of 18% from 28%. The price for auto accessories has also reduced by 8.5%.”

He further told ET that the double shifts, normally limited to the festive season, could continue beyond Diwali due to the GST boost.

The clothing sector is also benefiting. Animesh Saxena, general secretary of the Garment Exporters & Manufacturers Association, said, “Apparel in the range of Rs 1,000-2000 has seen an increase in interest from consumers, as the GST rate for clothes priced below Rs 2,500 has been slashed to 5%.”

This year, Saxena told ET, the demand for apparel increased by 15-20% this festive season over last year, boosted by GST reforms that have “definitely given some push to the consumption drive of Indian buyers.”

Toy manufacturers are experiencing similar optimism. Manu Gupta, chairman of the Toy Association of India, said, “There's buoyancy in sales as GST reforms, along with festivities, have changed the mood of consumers. Further, there's sufficient capacity to meet the demand surge, with the tariff situation creating spare capacities.”

The footwear sector is also benefiting from the tax changes.

Gopal Gupta, President of the Agra Footwear Manufacturers & Exporters Chamber, also told ET, “Footwear that are below Rs 2,500 have been brought into a lower tax slab under the new GST rates, which is likely to boost the demand for them.”