India Inc. is set to clock a 6–7 per cent revenue growth this fiscal, thanks to the recently announced GST rate cuts, according to a new report by Crisil
Intelligence and Analytics. The agency says the tax relief will likely stimulate consumer spending across key sectors, though anti-profiteering provisions in the GST framework may prevent this revenue boost from translating into significant margin gains. The report attributes the anticipated growth largely to the timing of the GST reductions, which coincide with global economic uncertainty and India’s festive and wedding seasons, periods historically associated with increased consumer activity. Sectors Poised For Growth: FMCG, Automobiles, Durables The FMCG, automobile, and consumer durables sectors are expected to be the biggest beneficiaries. Crisil noted that the pass-through effect in these categories will be direct, meaning customers can expect lower prices at the retail level. In the automobile sector, for instance, the GST cut on two-wheelers with engine capacities below 350cc, which represent around 90 per cent of the market, is expected to improve sales by 100–200 basis points, making both scooters and motorcycles more affordable. For consumer durables, prices of items like air conditioners and large-screen TVs (above 32 inches) could fall by 7–8 per cent, as companies are likely to pass on the tax savings to customers. Hotels, Housing, And Agriculture Also Benefit In the hospitality industry, a reduction in GST on room tariffs up to Rs 7,500 from 12 per cent to 5 per cent is expected to drive growth in both the hotel and travel sectors. The construction industry will also see improved affordability. Lower GST on key materials is expected to reduce the cost of individual housing buildings (IHBs) in both rural and urban areas, giving homeowners room to upgrade or expand their living spaces. Additionally, the agriculture sector is set to benefit from smoother business operations and improved demand due to reduced GST on key inputs. Aviation And Premium Travel See Mixed Impact The aviation sector presents a mixed picture. While the 5 per cent GST on economy class remains unchanged, helping preserve pricing stability for the segment that makes up 92 per cent of airline revenue, the hike from 12 per cent to 18 per cent on premium and business class tickets is expected to have minimal impact, as these passengers are typically less sensitive to price increases. Margins May Stay Flat Despite Revenue Uptick Despite these sectoral gains, profit margins may not expand significantly. Crisil cautions that anti-profiteering rules under the GST framework could curb companies from retaining the benefits of the tax cuts, mandating them to pass savings to consumers instead. In essence, while lower GST rates are expected to stimulate demand and push revenues upward, businesses may not be able to capitalise on this entirely through enhanced margins.
