POV: Will the GST rate cuts boost ad spends this festive season?

India’s festive season, stretching from Onam to Diwali and even Christmas, is the pinnacle of consumer spending, prompting brands across various sectors to allocate substantial portions of their annual advertising budgets to capture consumer attention. 

The introduction of GST 2.0, which will take effect on 22 September 2025, has brought about a simplified tax structure. This reform reduces the existing four-tier GST slabs of 5%, 12%, 18%, and 28% to primarily two rates: 5% for essential goods and services and 18% for most other items. Additionally, there will be a special 40% slab for luxury and sin goods, alongside a 0% slab for essential items.

This reform, designed to boost consumer affordability by lowering prices on items like FMCG products, small cars, and electronics, is expected to increase disposable income, potentially driving higher consumption. 

As a result, brands in categories such as FMCG, automobiles, and electronics may want to capitalise on this festive fervour, but will the GST cuts translate into a surge in advertising expenditures? Experts weigh in on the possible impact.

Edited Excerpts

Mayank Shah, VP, Parle Products

The GST 2.0 reform is a bonanza for consumers, with nearly 95% of food items and many FMCG products now taxed at 5%. This will likely drive significant demand over the next one to two years, as lower prices or better value on smaller packs encourage more purchases. With increased consumer buying, companies will ramp up advertising, especially during the festive season in September and October, to secure both volume and value market share.

FMCG, automobiles, and durables—many of which have shifted from 28% to 18% GST—will see notable ad spend increases, as brands aim to capitalise on the 5% to 15% price reductions fuelling demand.

Krishnarao Buddha, marketing expert

The festive season will see a buoyant rise in ad spends, with manufacturers capitalising on the positive sentiment from GST 2.0, dubbed a Diwali gift by the Modi government. Effective from 22 September, the new tax structure, with 90% of categories moving to 5% or 18% GST, will coincide with festive demand, driving a 15-20% surge in ad spending compared to last year.

While categories such as tobacco and carbonated drinks remain at 40%, FMCG (especially home and personal care), durables, and automobiles (notably smaller vehicles up to 1500cc cars and 350cc bikes) will lead, with increased presence across television, digital, and outdoor media.

Mohit Hira, co-founder, Myriad Communications

Will the revised GST rates help increase ad spends this festive season? Does the sun rise in the east? Of course, it will. For many categories that were caught in a downward spiral of uncertainty and deferred purchases, this revision is a godsend opportunity.

Chances are, there will be many companies that would have cut back on production; they must have revisited those plans and stepped up manufacturing. The brakes are off, and everyone will try to cash in on this momentum: it’ll be good for the brands, for banks and lenders, for distributors, retailers… as the government said, “Diwali comes early this year.”

There is one caveat though: not every category and every brand will benefit because the overall sentiment is still pessimistic.

Given the macro-level volatility and ambiguity, consumers may not have enough liquidity and confidence to splurge across the board. So, what’s necessary will be bought; what’s discretionary may still see a slow start.

Lloyd Mathias, business strategist and angel investor

The GST 2.0 reforms, reducing rates for consumer durables such as air conditioners and televisions and FMCG items like bread and soaps from 12% to 5%, alongside automobiles dropping from 28% to 12%, will drive a significant spike in ad spends this festive season, particularly in the 45 days leading to Diwali and extending to Christmas.

Packaged foods, consumer durables, and smaller cars from brands like Maruti, Hyundai, and Tata will see robust activity, with real estate also rebounding due to lower cement prices.

Coupled with increased disposable income from a raised income tax slab of 12 lakhs and inflation below 2% for months, this GST rationalisation will boost consumer confidence, prompting brands to invest heavily in advertising to capture the surging demand.