Archive · 21 Nov 2025
GST 2.0 Reductions Lower Auto & Durables Prices, FMCG Response Mixed
After GST rates were reduced in September, prices for cars and big-ticket items like TVs and air conditioners dropped in October.
However, the response from Fast-Moving Consumer Goods (FMCG) companies was mixed, with some passing on the tax cuts and others not.
Experts suggest this could be due to high inflation in the past or non-compliance, and regulators may need to step in.
GST 2.0 reductions led to lower prices for automobiles and consumer durables in October
FMCG items showed uneven responses, with some categories like non-alcoholic beverages and tobacco not fully passing on GST cuts
Automobile inflation declined significantly, with four-wheelers down by 7% and two-wheelers by 4.9%
Consumer electronics also saw price reductions, with air conditioners and TVs recording deflation
FMCG items like chips and butter saw price declines, but toiletries' response was marginal
- Who
- Consumers, FMCG companies, automobile manufacturers
- What
- Experienced price changes due to GST 2.0 reductions
- When
- In October 2025
- Where
- India
- Why
- To reduce prices for consumers and boost demand
Optimistic View
Cautious View
Pass-Through of GST Cuts
Optimistic View
Most sectors passed on the benefits, with autos and electronics seeing significant price drops.
Cautious View
FMCG items showed a weak response, suggesting possible non-compliance or delayed pass-through.
- GST Reduction Date
- September 22, 2025
- Primary Impacted Sectors
- Automobiles, Consumer Durables, FMCG
- Average Inflation Reduction in Autos
- 3.1%
- Average Inflation Reduction in Electronics
- 2.5%
- Uneven Response Sectors (FMCG)
- Non-alcoholic beverages, prepared meals, health, personal care, tobacco, intoxicants