Channel dynamics also evolved significantly. The festive period saw disruptions from multiple priced stock items for the same products, but these normalized by January. Intense competition heated up in the online space, with quick commerce platforms ramping up discounts 

The Indian government implemented significant GST rate cuts (often referred to as GST 2.0) in September 2025, with effects starting around September 22, just in time for the festive season. These reductions, which lowered taxes on essentials, consumer goods, electronics, automobiles, and more, aimed to boost household spending, stimulate consumption, and support overall economic growth amid external pressures like U.S. tariffs.  The cuts initially delivered a noticeable uplift in demand during the festive period, particularly in October, with strong sales reported across categories like jewelry, electronics, apparel, home furnishings, and sweets.

Retailers described the season as a "blockbuster," as lower prices left consumers with more disposable income, leading to heightened purchases of both everyday items and higher-ticket products. However, the key question analysts are now exploring is whether this festive surge translated into sustained consumption growth beyond October, or if it remained largely a seasonal phenomenon. Recent GDP advance estimates suggest that consumption may have slowed in the second half of the fiscal year.

To gain deeper insights, experts turned to market and company data for a clearer picture. Co-founder and CEO of market research firm provided a nuanced view based on pan-India data across companies and geographies. He noted that post-festive months (November and December) showed sustained growth, but with an important shift. The transition to the new GST regime flushed out excess inventory in the system, effectively "resetting" the FMCG sector. Distributors and retailers moved from stockpiling based on supply concerns to restocking driven by actual consumer demand.

This reset, market experts say contributed to a return of consumption-led growth rather than purely inflation-driven increases seen earlier. While year-on-year value growth for October-December 2025 (around 6.9%) was lower than the previous quarter's 13.3% (July-September 2024), One market analyst  emphasized that this was primarily because the data measures value, not volume. The GST cuts led to widespread price softening passed on to consumers, so impressive volume-driven growth occurred despite lower prices — making the underlying demand strength more notable than headline value figures suggest.

A consumer companies analyst focusing on quick commerce, modern trade, e-commerce, and broader indicators like UPI transactions, offered a complementary perspective. He observed that Q3 (October-December) performance, both in value and volume terms, fell short of expectations given the anticipated price elasticity from the tax cuts. While prices improved and some volume gains materialized, the short-term boost in discretionary consumption appeared limited, with hopes pinned on a gradual trickle-down effect into 2026.

Channel dynamics also evolved significantly. The festive period saw disruptions from multiple priced stock items for the same products, but these normalized by January. Intense competition heated up in the online space, with quick commerce platforms ramping up discounts late last year and new players entering the fray, while major e-commerce giants like Amazon and Flipkart joined the discounting battle.

A top official of the finance department opined that geographically and category-wise, trends diverged. Rural areas outperformed urban in growth, driven by basics such as ghee, milk-based foods, and packaged essentials, aided by good monsoons, lower inflation, and the consumption reset. Urban consumption, meanwhile, leaned toward premiumization and indulgence, with categories like confectionery performing strongly. Higher-ticket items — including automobiles, electronics, and jewelry — benefited more immediately from the GST reductions compared to smaller-ticket discretionary items like apparel or indulgent snacking, which lagged relatively.

Another key structural shift highlighted was the pressure on traditional FMCG players. Quick commerce and e-commerce growth has democratized the market, enabling rapid expansion of D2C brands and private labels (in-house brands of modern trade and online platforms). This has led to some market share loss for established FMCG companies, particularly at the value end, even if overall consumption holds steady.

In summary, while the GST cuts sparked a strong festive boost and supported a consumption reset, the post-festive period revealed a more moderated, volume-led recovery amid price adjustments, channel shifts, and evolving competitive landscapes. Premium categories like confectionery thrived, while home care faced temporary headwinds from the inventory reset. These insights, drawn from real-time market data, highlight the complex and ongoing evolution of India's consumption story.