Retail Sector Outlook (Q2 FY26): Early Festive Season and GST Cuts Drive Steady Growth

Retail Sector Outlook (Q2 FY26): Early Festive Season and GST Cuts Drive Steady Growth

The article provides a positive preview of the retail sector’s performance for the second quarter of the fiscal year 2026 (Q2 FY26), forecasting steady growth for certain segments, primarily enabled by two factors: the early onset of the festive season and the implementation of recent Goods and Services Tax (GST) rate cuts.

Key Growth Drivers

• Early Festive Season Demand: The shift in the timing of major festivals resulted in early stocking and purchasing activity. This boosted sales volumes, especially towards the end of the quarter.
• Impact of GST Rate Cuts: The GST 2.0 rate rationalization is cited as a significant enabler. The lowering of tax rates on a wide array of consumer goods, white goods, and automobiles immediately translated into lower final prices, improving consumer sentiment and affordability.
• Segment-Specific Gains: The growth is expected to be more pronounced in sectors that saw the deepest tax reductions, such as automobiles (two-wheelers and small cars), consumer durables, and various FMCG (Fast-Moving Consumer Goods) categories.

Outlook

The report suggests that the combination of fiscal stimulus from the GST cuts and the traditional festive euphoria helped counteract any residual economic slowdown, setting the stage for sustained volume growth in the upcoming quarters.