India GST Reform Alters Consumer Electronics Market
India’s multiyear overhaul of the Goods and Services Tax, widely referred to as GST 2.0, is reshaping consumer demand dynamics in the domestic electronics sector, with recent data and industry feedback suggesting a notable divergence between premium and mid-tier product consumption. Tax rationalisation implemented from September 22, 2025 has simplified the GST structure to key slabs of 5 % and 18 % for most goods, replacing higher levies that previously applied to a wide range of durables, including consumer electronics. This policy shift has inadvertently strengthened demand for higher-end products while leaving mid-tier segments comparatively subdued, signalling a new consumption split that could influence manufacturing, retail and urban buying behaviour.
Under the new framework, items such as televisions, air conditioners, refrigerators, and dishwashers have seen a uniform 18 % GST rate — down from the earlier 28 % slab for many models — while essentials and select appliances attract a lower 5 % rate. Experts say this reduction has made premium and aspirational products more accessible, especially in urban and Tier-II markets where consumer confidence and disposable incomes are rising. Anecdotal reports from festive sales rounds indicate stronger sales momentum for larger-screen TVs and advanced appliances, though comprehensive official data is still pending.Yet, industry observers and retailers are noticing that this tax reform has created uneven effects across consumer segments. While high-end products benefit from clearer pricing and perceived value, mid-tier electronics — often purchased by budget-conscious buyers — have experienced slower uptake. Analysts attribute this partly to lingering stock priced under old tax structures and inconsistent price passthrough at local retail levels, which has muted the intended impact of the GST cuts for mid-range goods. Surveys from recent consumption cycles show that while many consumers see clear price benefits on top-tier items, a significant share of buyers report partial or no price reductions on mid-tier purchases.
The consumption split has broader implications for India’s manufacturing and supply chains. Premium electronics typically involve more complex components and higher value-added assembly, meaning stronger demand in this segment could deepen domestic production capabilities and attract investment in advanced electronics manufacturing. Such a shift aligns with government priorities to boost local manufacturing and reduce import dependence in strategic technologies.However, mid-tier segment weakness points to growing inequities in consumption patterns. Urban planners and economic analysts caution that if the benefits of tax reform are concentrated among higher-income buyers, then real gains in household savings and broad-based demand stimulation may be limited. This could, in turn, slow demand in support services and MSME ecosystems that depend on stable sales across value segments.Retail infrastructure and e-commerce channels are also adapting. Logistics expansion into smaller cities, especially Tier-II and Tier-III hubs, is being prioritised by major platforms to tap both premium and emerging demand clusters, a strategy amplified by tax-induced price clarity and competitive pricing.
Looking ahead, policymakers and industry stakeholders will be watching whether further tweaks to the GST regime — potentially around compliance, classification clarity and enforcement — can help balance consumer benefit across segments while sustaining growth in manufacturing and retail markets. Clearer price signals, better pass-through mechanisms and data-driven tax administration could be pivotal in equalising opportunity for both mid-tier and premium electronics consumption in India’s evolving urban economy.
