Our Terms & Conditions | Our Privacy Policy
India’s online shoppers have paused purchases as the upcoming GST reforms are likely to make smartphones to televisions cheaper by 10%, according to analysts tracking the e-commerce industry in the country.
India’s online spending—on the likes of Amazon, Flipkart to Swiggy, Zomato and Netflix, Jio Hotstar—have become large enough to be included in retail inflation data.
The blip is temporary, they say, as sales are set to rebound as clarity appears on India’s new GST structure and festive fervour takes hold.
“Retailers are managing elevated inventory levels, while categories such as electronics and appliances are seeing deferred demand,” Shubham Nimkar, research analyst at Counterpoint Research, told PTI. “India’s e-commerce majors are engaging with brands to prepare for a likely surge in demand in second-half of the festive season in October.”
“The expected GST changes will influence pricing strategies, as e-commerce platforms recalibrate product positioning to reflect the new tax structure,” he said. “Essentially, this is a blip before a rebound.”
What are the GST reforms?
Prime Minister Narendra Modi, in his Independence Day speech, announced India’s biggest indirect tax reforms since 2017 when Goods and Services Tax first came into effect. The GST structure is likely to become a two-tier system from four-tier at present.
According to reports, the government is planning only two tax slabs—5% and 18%—from 5%, 12%, 18% and 28% at present. An additional tier of 40% is also planned but only for so-called sin goods, thereby doing away with additional compesation-cess mechanism.
White goods—washing machines, air-conditioners, smartphones refrigerators and TVs—are likely to attract 18% GST in the new mechanism, as against 28% at present. Small cars and motorcycles are also likely to get cheaper.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising finance ministers from all states, will meet on 3-4 September to discuss the reforms.
The Lull Before The Storm?
Still, the pause in e-commerce activity is hard to ignore.
“The anticipation of revised tax slabs moving from the current four-tier structure to a simplified two-rate system of 5% and 18%, has led to a ‘wait-and-watch’ sentiment among buyers,”Naveen Malpani, partner and retail industry leader at Grant Thornton, said in a statement.
“Internal estimates suggest a potential 25-30% impact on high-ticket items if GST clarity is delayed. This cautious approach is driven by expectations of price drops once the new slabs are implemented, likely around Diwali 2025. For instance, a ₹1.2 lakh smartphone could become 10% cheaper, post-reform, prompting buyers to delay their decisions.”
Festive Season Sales
To be sure, e-commerce firms—whose flagship sales during the festive season account for a quarter of their annual revenues—are aware of the impact the upcoming GST reforms can have on their sales strategies. Still, they know people will buy, irrespective of what the changes are.
“Families plan purchases around festivals—whether it’s a new appliance, a gadget, or a home improvement,” Saahil Goel, managing director and chief executive at Shiprocket, told PTI. “This underlying demand remains intact, and, if anything, GST rationalisation will only serve as an added incentive.”
For Rajneesh Kumar, chief corporate affairs officer at Flipkart Group, GST rationalisation is a “structural reform that will give a strong boost to India’s consumption, energise festive demand, and support India’s growth story”.
Malpani of Grant Thornton projects a 15-20% surge in festive e-commerce sales once the GST reforms are enacted, especially in electronics and quick-commerce platforms. This rebound, he said, will be driven by enhanced consumer confidence, simplified compliance, and increased affordability.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.