Top 3 sectors to benefit from the new GST rates
- Kiran S N
- 2 days ago
- 5 min read
The government’s upcoming GST 2.0 reforms are being called the biggest tax revamp since 2017. The new framework aims to simplify compliance, improve credit flow, and rationalize rates. While the impact will be broad-based, some sectors stand to gain more than others. Here’s a look at the top 3 beneficiaries:
FMCG
Among all sectors, FMCG is poised to be the most immediate beneficiaries of GST 2.0. These are products we use daily, from packaged food to soaps. A cleaner and simplified tax structure directly translates into fewer price distortions, making these goods more affordable and accessible to consumers.
For companies, the benefits go beyond just tax rates. One of the biggest pain points in FMCG has always been working capital getting stuck in refund claims, but with GST 2.0 promising faster input tax credit processing and smoother invoice matching, firms will finally have greater liquidity at hand allowing more flexibility in managing costs and ultimately stronger margins. This advantage is further amplified by the trickle-down effect: much of the FMCG ecosystem depends on small and medium vendors in areas like food processing, packaging, and appliance components, and simplified compliance under GST 2.0 reduces their costs, making supply chains leaner and more efficient. When suppliers are healthier, larger companies naturally stand to benefit as well.
The GST 2.0 reset is not just about cheaper goods on the shelf, it’s also about who in the listed space stands to benefit most. And here, two names stand out in FMCG: Colgate-Palmolive and Britannia.
Colgate-Palmolive looks like the ultimate GST winner. Almost its entire portfolio of toothpaste, toothbrushes, powders, soaps and more moves from 18% to 5% GST. That means a 13 percentage point tax cut on over 80% of its revenue base. Analysts expect a 250-350 bps margin expansion, with Nomura flagging Colgate as the “maximum GST leverage play.” More importantly, lower prices can help it claw back share in rural India, where it has been steadily losing ground to local brands. In other words, GST 2.0 gives Colgate the perfect tailwind to spark both volume and market share growth.
Britannia Industries, too, is positioned for a demand surge. With biscuits forming nearly two-thirds of revenue and moving from 12% to 5% GST, its core business directly benefits. Add in cakes, bread, and dairy....all categories seeing GST cuts making the company’s entire mass-market portfolio more affordable. Nomura estimates Britannia could gain 200-300 bps of market share, as lower prices make branded biscuits more competitive against unorganized players. For a company already synonymous with everyday consumption, that’s a powerful growth lever.
Other notable names also stand to gain. Bikaji Foods benefits from GST cuts on namkeens and sweets, boosting the shift from unorganized to branded snacking. HUL gets a lift in soaps and shampoos, with analysts seeing a 200-400 bps volume push in rural markets. Nestlé India gains from Maggi, chocolates, and dairy, with a 200-250 bps margin upside, while Emami’s affordable hair oils become even more competitive in small towns.
Consumer Durables and Discretionary
GST 2.0 delivers a major push to both durables and discretionary spending by making big-ticket appliances and mass-market fashion significantly cheaper. A 10% cut on appliances like ACs, refrigerators, and washing machines improves affordability just as the festive season kicks in, while the sharp 5% GST rate on apparel and footwear under ₹2,500 makes value retail the biggest winner in discretionary. The result is a clear divide mass-market players stand to gain, while premium names face margin and demand pressure.
Vishal Mega Mart looks well-placed in this new environment. With its focus on value fashion and affordable home products, nearly its entire portfolio falls under the lower GST slab. This positions Vishal to capture strong Tier-2 and Tier-3 demand, where affordability drives consumption.
Trent is more of a mixed bag. On one hand, Zudio benefits massively as 80% of its products are priced under ₹2,500, setting it up for 25-30% growth in value fashion. On the other hand, Westside faces headwinds, as its premium portfolio gets more expensive with the higher GST slab. The net effect is still positive, since Zudio’s rapid scale-up offsets Westside’s drag, but investors need to watch how the brand mix evolves.
On the durables side, Voltas and Amber Enterprises emerge as the clear appliance beneficiaries. Voltas, with nearly 75% of revenue coming from ACs, is expected to ride a wave of festive demand, with Jefferies projecting a 6-8% EPS lift as affordability improves. Amber, the contract manufacturer supplying all the big OEMs, is even more leveraged, with over 90% of revenue exposed to categories under the tax cut. Analysts see an 8-10% EPS boost, making it a direct play on industry-wide volume growth.
Auto
If FMCG was about daily essentials, automobiles are about big-ticket aspirations. GST 2.0 gives the auto sector the single biggest boost it has seen in years by making mass-market mobility more affordable. Small cars, two-wheelers, and tractors, the backbone of India’s auto story....all get double-digit tax cuts. The result: sharper price drops, stronger rural affordability, and a demand revival that could not have been timed better, just ahead of the festive season.
Maruti Suzuki is the ultimate GST beneficiary in autos. With nearly 85% of revenue coming from small cars, its portfolio aligns perfectly with the tax cut. Price tags on popular models like Swift and Alto are expected to fall by ₹40,000-70,000, which could drive 12-15% volume growth in FY26. Analysts project an EPS boost of 18-22%, as operational leverage amplifies the gains. For investors, this makes Maruti the most direct play on India’s affordability-driven car boom
Hero MotoCorp also sits firmly in the sweet spot. Almost its entire portfolio is commuter bikes under 350cc, which now see a 10 percentage point GST cut. Models like Splendor and Passion are suddenly cheaper by ₹7,000-10,000 a meaningful difference for rural and first-time buyers. CRISIL expects 15–18% volume growth, translating into a 20-25% EPS uplift. Hero, already a rural leader, looks set to consolidate its dominance further.
Escorts Kubota brings the rural tractor story to the table, and here the benefit is dramatic. With GST cuts translating into savings of ₹50,000-1,00,000 per tractor, demand in Agra-heavy states is expected to surge. Analysts peg 20-25% volume growth as rural incomes improve alongside the tax benefit, leading to a potential 25-30% EPS jump. Escorts effectively becomes a direct play on India’s rural recovery cycle.
Beyond the top three, Tata Motors benefits through its small-car portfolio, though SUVs see limited relief; analysts see a 10-12% volume lift aided by price cuts on models like the Tiago and Nexon. Bajaj Auto gains from the two-wheeler and 3-wheeler segment, where GST savings of ₹8,000-20,000 per vehicle could accelerate demand across domestic and export markets. In contrast, Eicher Motors (Royal Enfield) is one of the few losers, as its >350cc bikes face a tax hike to 40%, leading to expected volume pressure in the premium segment.
Disclaimer: This content is for educational purposes only; please conduct your own research and consult with a qualified investment advisor before making any investment decisions.
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