After a year of uneven performance, India's consumption story is showing signs of improvement, though it is not yet racing ahead at full speed. Corporate India is placing its bets on demand gaining momentum in 2026, but with a clear note of caution. While a combination of rationalised Goods and Services Tax (GST), potential income tax benefits, monetary policy easing, and controlled inflation is expected to boost disposable income, business leaders are questioning how long tax reductions alone can fuel demand without a parallel rise in household earnings.
The Double-Edged Sword of Policy Support and Global Headwinds
The recent GST rationalisation has provided a short-term boost to demand for several products. However, this fiscal measure is not seen as a permanent substitute for income-led growth. NS Satish, President of Haier Appliances India, which is targeting revenues of Rs 14,500 crore in 2026, noted that while the GST rejig acted as a timely catalyst during festive seasons, sustained consumption will hinge on employment trends, income stability, and credit access.
Simultaneously, a weaker Indian rupee poses a significant threat, potentially raising costs for import-dependent industries and leading to higher consumer prices. Sandeep Sehgal, Director and Head of Sales at Panasonic Life Solutions India, highlighted that currency volatility remains a key watch point, forcing companies to intensify localisation, optimise costs, and take careful pricing decisions to protect margins.
Imminent Price Hikes and Sector-Specific Challenges
Some industries are already bracing for price increases. Kamal Nandi, Business Head and EVP at Godrej Enterprises Group, pointed to a mix of currency depreciation, high commodity costs, and a scheduled change in energy efficiency norms (Bureau of Energy Efficiency star ratings) as factors that will significantly raise costs in the cooling category. He projected an imminent price hike of 5%-7% for air conditioners and 3%-5% for refrigerators due to the energy regime changeover.
In the agri-business sector, Angshu Mallick, Executive Deputy Chairman at AWL Agri Business, provided a stark example: at $1,300 per metric tonne for crude sunflower oil, every one rupee devaluation increases the import price by Rs 1.5 per kg. He acknowledged, however, that the GST reduction has made products like margarine and soya nuggets more affordable, supporting short-term demand growth in these segments.
A Gradual Uptick Rooted in Cautious Optimism
The overarching sentiment among India Inc. is one of careful hope rather than unbridled excitement. Executives believe that if stable inflation, softer interest rates, and targeted tax relief converge, consumer sentiment will improve gradually, particularly in urban markets. Akhil Jain, CEO & MD of fashion retailer Madame, summed up the mood as "cautiously optimistic."
Manish Anandani, MD at Kenvue, identified ongoing digital adoption and a trend towards premiumisation across both urban and rural markets as key drivers for the next phase of expansion in the Fast-Moving Consumer Goods (FMCG) sector. Echoing the view that consumers have more money to spend, Sudhir Sitapati, MD & CEO at Godrej Consumer Products, stated, "There is more money in consumers' hands. So, hopefully that will drive growth."
In conclusion, the roadmap for Indian consumption in 2026 is not one of a sharp, immediate rebound but of a measured and gradual uptick. The hope is that a confluence of positive tailwinds—policy support, digital growth, and premiumisation—will outweigh the risks posed by currency fluctuations and the need for broader income growth to create a sustainable demand environment.
