The Centre’s move to focus on personal tax reforms is expected to to stimulate middle class spending and revitalise urban demand boosting India’s consumption story and spur economic growth.

Consumer goods including FMCG, durables and retail sector are likely to see an uptick in demand believe experts. Consumer goods sector especially FMCG have been witnessing sluggish demand due to an urban slowdown for the past few quarters driven by lower and middle end of the middle income households.

Experts said that rationalising tax burden on the salaried class is a step in the right direction. The increase of the no-tax limit from ₹7 lakh to ₹12 lakh is being considered as a significant step in putting more money back into consumers’ hands.

Abneesh Roy, Executive Director, Nuvama Institutional Equities said, “Urban demand has been a challenge across companies. We expect the tax reforms to revive consumption gradually. It is also positive for urban consumption as purchasing power increases for the lower and middle end of urban middle class.”

Naveen Malpani, Partner and Consumer Industry Leader, Grant Thornton Bharat said “Softening of income tax rates is set to release nearly ₹1 lakh crore into the hands of consumers, providing a significant boost to the consumer sector. This increase in disposable income will empower customers to spend more, driving demand across various segments. As disposable incomes rise, consumer confidence is expected to improve, further fueling consumption-driven growth. This positive shift in consumer spending power could act as a catalyst for growth in industries ranging from retail to durable goods, contributing to a strong economic recovery and sustained market expansion.”

Aasif Malbari, Chief Financial Officer, Godrej Consumer Products Ltd said that the Budget lays a strong foundation for a more consumption-driven economy, creating significant growth opportunities for the FMCG industry.“Investments in rural development and job creation will boost economic activity and drive higher consumption, opening new opportunities for market expansion. The National Manufacturing Mission is a strong step toward enhancing domestic production, reducing import dependencies, and improving cost efficiencies. Additionally, tax reforms benefiting the middle class will increase disposable income, further fueling demand across essential and aspirational FMCG categories,” he added.

Anand Ramanathan, Partner & Consumer Industry Leader, Deloitte India pointed out that the measures announced in the budget will help both rural and urban demand by encouraging private consumption while maintaining government capital expenditure.

“Social security for gig workers, enhancing guarantee support for MSMEs, extending mudra loans to homestay providers and making credit more accessible for farmers will help broad base the consumption support beyond the formal sector to more unorganised parts of the economy,” he added.

Santosh Katariya President, Clothing Manufacturers Association of India said, “Lowering of Income Tax at various levels will hopefully provide a huge increase in disposable income, increasing consumption.Various changes in the TDS and TCS limits should also give an impetus to Consumption.”