GST Cuts, Softer Inflation Set To Boost Consumer Goods Demand

The top consumer goods and appliances manufacturers in India anticipate that sales volume will recover in the next fiscal year, as inflation is starting to decrease and the GST rate is reducing product prices and stimulating household spending.

After several quarters in which revenue growth was largely driven by price hikes and premiumisation, companies now anticipate that volumes will outpace value growth, which is a key signal of recovery in the mass market.

Are FMCG Majors Already Seeing Early Signs Of Recovery?

At Hindustan Unilever (HUL), chief financial officer Niranjan Gupta said the company is focusing on driving growth through volumes. India’s largest consumer goods company reported revenue growth of 6% in the December quarter. This was supported by a 4% increase in underlying volumes, marking the fastest pace seen in the last 12 quarters.

The company expects macro conditions to improve further in the next fiscal year. Gupta added that HUL is prioritising growth over margins, although margins will remain within the guided range.

Industry data suggest that recovery this fiscal year has been gradual. Fast-moving consumer goods (FMCG) volume growth moderated to 4.5% in the October-December quarter, compared with 4.6% in the year-ago period and 4.7% in July-September 2025, according to research firm Numerator.

However, the firm expects momentum to strengthen through the calendar year and projects FMCG growth to accelerate to around 5% by mid-2026.

NielsenIQ data showed India’s FMCG industry posted 12.9% year-on-year value growth in the July-September quarter, supported by a 5.4% increase in volumes and a 7.1% rise in prices.

How Are Category-Specific Trends Playing Out?

The category-specific trends are as follows:

1. Soaps And Daily Essentials

At Godrej Consumer Products, chief executive Sudhir Sitapati said GST cuts are expected to support soap sales. While India volume growth stood at 7% in FY24, largely led by soaps, it slowed to 5% in FY25 due to weaker demand in the category. The growth will resume to 6-7% this current fiscal year, with further growth to be noticed in FY27.

2. Cooling Appliances

In the consumer durables segment, companies such as LG Electronics India, Blue Star, Voltas and Havells are optimistic about summer demand for air conditioners and refrigerators.

Executives pointed to:

• A weak base last year

• Pent-up replacement demand

• Gradual improvement in consumption trends

• Low penetration levels in cooling categories

LG Electronics India reported that January sales were better than the same period last financial year, which was a positive sign of recovery. Blue Star observed that delayed purchases were now convertible into revived demand as consumers resumed planned purchases.

Together, these trends suggest that both staple and discretionary segments may see a gradual shift toward volume-led growth in the coming fiscal year.

Over the past six years, growth in home appliances has largely been driven by premiumisation, with mid- and high-end models contributing significantly to sales.

LG and those like them are now paying more attention to entry-level products to boost volumes and appeal to price-sensitive consumers. This change proposes a more sustainable shift from value-based growth to volume-based recovery during the next fiscal year.

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What Does This Mean For Investors?

The consumer and appliance market in India is changing to a volume-based recovery as compared to price-based growth. GST reductions and alleviating inflation will ensure that the mass market gets going again, particularly in the needs and entry-level product market. The initial feedback of the FMCG and durable firms indicates that the slowdown may be approaching its bottom.

The recovery, however, is likely to be gradual. With companies prioritising growth over margins, near-term earnings may depend more on scale and operating leverage than pricing power.

For investors, the key signal to watch is sustained volume momentum. When volumes are rising faster than value, it would verify a larger and lasting revival of consumption. Selective exposure to companies with strong distribution and balanced portfolios may offer better risk-reward as the cycle stabilises.

Sources:

Economic Times

Times of India