(MENAFN) India’s recent consumption tax reductions have sparked a notable rise in consumer spending during Diwali, the country’s largest festival, according to a news agency, citing data from retail intelligence platform Bizom. From September 22 to October 21, consumer spending rose 8.5% compared to the same period last year, reaching $67.6 billion. Top-performing sectors included jewelry, electronics, clothing, home furnishings, and sweets.

The increase in demand is largely attributed to a tax reform announced in September aimed at softening the impact of US tariffs of 50% under President Donald Trump. The government reduced the Goods and Services Tax on nearly 400 product categories, marking India’s first major tax cut in almost a decade. Most household items saw significant tax reductions, encouraging higher spending ahead of the festival season.

Automakers also benefited from the reform, with companies such as Maruti Suzuki, Tata Motors, and Mahindra & Mahindra reporting strong sales growth. Tata Motors delivered over 100,000 cars, while Mahindra & Mahindra saw a 27% rise in tractor sales, fueled by favorable monsoon conditions and the tax cuts.

Economists caution that part of the spending increase may reflect pent-up demand rather than a sustained boost. Nevertheless, the Indian central bank raised the GDP growth forecast for the current financial year to 6.8% from an earlier estimate of 6.5%, following a first-quarter GDP growth of 7.8%—up from 7.4% in the previous quarter—the fastest pace in seven quarters, driven by strong investment and consumption.

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