New Delhi, February 1, 2025 – The Nifty Consumer Durables Index surged more than 2% on February 1, following Finance Minister Nirmala Sitharaman’s announcement of income tax relief in the Union Budget 2025. Stocks of major consumer durables companies, including Blue Star, Voltas, Whirlpool, Crompton Consumer, and Havells, saw significant gains, with some rising more than 7% in intraday trading. This boost was driven by the government’s decision to increase the income tax slab, which is expected to bolster consumer spending and drive demand for durable goods.
Gainers in Consumer Durables Sector:
- Blue Star: +7.58%
- Voltas: +4.27%
- Whirlpool India: +5.2%
- Crompton Consumer: +4.5%
- Havells India: +4.2%
The Consumer Durables Index reached an intraday high of 38,485.00, up from an opening value of 37,017.95, reflecting a rise of over 2%. The index had closed at 37,591.10 on the previous day, and the increase was largely attributed to positive investor sentiment following tax relief measures.
Income Tax Relief Lifts Sentiment Across Consumer Sectors
The announcement of zero income tax for individuals earning up to ₹12 lakh under the new tax regime has proven to be a major boost for consumer-facing industries. According to Anshul Jain, Head of Research at Lakshmishree Investment and Securities, the revision of tax slabs is set to increase disposable income for the middle class, which in turn is expected to drive demand for consumer durables and other discretionary items.
Avinash Gorakshkar, Head of Research at Profitmart Securities, noted that the income tax cap increase from ₹7 lakh to ₹12 lakh would greatly benefit the Indian middle class, which constitutes a significant portion of consumers for FMCG and consumer durables products. The added money in their hands is expected to lead to higher spending and consumption in the coming months, especially in FY26.
FMCG and Consumer Durables Stocks See Significant Gains
In addition to consumer durables, FMCG stocks also saw a sharp rise in response to the tax relief announcement. Despite overall market volatility, with Sensex and Nifty both trading lower by 0.56% and 0.67%, respectively, shares of leading FMCG companies surged:
- Hindustan Unilever Ltd (HUL): +4%
- Godrej Consumer Products: +6.38%
- ITC Ltd: +4.25%
This rise in FMCG and consumer durables stocks signals optimism for the future of consumption-driven sectors, with analysts projecting increased demand due to the tax cuts.
Tax Rebate to Stimulate Consumer Demand
The Union Budget 2025 also introduced a tax rebate for individuals with incomes up to ₹12 lakh, alongside a reduction in slab rates. This move is expected to stimulate spending, particularly in the consumer goods and durables markets. Sitharaman’s statement on direct tax incentives is seen as an effort to re-energize consumer demand, which had been sluggish due to high inflation and slow economic recovery in recent years.
Industry Reactions: Boost for Discretionary Spending
Before the budget, industry experts had anticipated initiatives that would boost private consumption expenditure, which remains below pre-pandemic levels. Dhiraj Relli, MD & CEO of HDFC Securities, stated that measures to boost consumption, such as direct tax incentives and job creation, would catalyze consumer spending across both urban and rural sectors.
Anil G. Verma, CEO of Godrej Enterprises, highlighted that increased disposable income would not only boost the consumer durables industry but would also have a multiplier effect on related sectors, such as electronic components and consumer goods manufacturing.
Impact on the Durables Industry and Future Expectations
The consumer durables sector had hoped for policies that would increase disposable income among consumers. Analysts also speculated that the Production-Linked Incentive (PLI) scheme might be expanded, which could incentivize domestic manufacturing and reduce reliance on imports.
The PLI scheme has been a key area of focus for many in the industry, particularly for electronic component manufacturers, who are anticipating government support to increase production and capacity.
Positive Outlook for Consumer Durables Sector
With tax relief boosting consumer spending, particularly among the middle class, the outlook for consumer durables remains optimistic. Analysts expect that the rise in disposable income will lead to a surge in demand for products like home appliances, electronics, and discretionary consumer goods in FY26. The budget 2025 measures are set to provide a much-needed push for the consumer durables industry and its associated sectors, paving the way for growth and increased private investments in the coming years.
