Growth engine revs up as GST collections surge, auto sales bounce back in September

By: Team India Tracker

The GST collections hit Rs 1.89 lakh crore in September, up 9.1%, the fastest in four months. Passenger vehicle sales rose 8% to 3.7 lakh units on pent-up demand and lower post-GST prices.

India’s economy is showing resilience amid global headwinds. The goods and services tax (GST) collections rose to Rs 1.89 lakh crore in September, up 9.1 per cent from a year earlier, marking the fastest growth in four months. At the same time, passenger vehicle (PV) sales increased 8 per cent, reflecting strong consumer demand. Together, these trends point to an economy that is navigating global challenges while benefiting from government measures, including targeted tax cuts, to sustain growth.

More significantly, the pickup is striking given the late August tax overhaul. The government collapsed the 28 per cent and 12 per cent GST slabs into new 18 per cent and 5 per cent brackets, pulling over 90 per cent of goods into lower categories. Economists worried consumers would delay purchases, waiting for prices to drop. That pause did happen in August—but September’s rebound shows demand is alive and well.

“The increase in collections suggests there hasn’t been a significant slowdown in activity despite the GST rate cuts,” the finance ministry noted. In plain terms: the tax reform worked without knocking the wind out of the economy.

Growth forecasts edge higher

The Reserve Bank of India (RBI) promptly revised its growth forecast upward, projecting GDP to expand 6.8 per cent this year, compared with 6.5 per cent earlier. Global ratings firm S&P, while more cautious at 6.5 per cent, agreed that robust domestic demand will offset the drag from weaker exports and US tariffs.

For policymakers, the GST reform has become a cushion—a way to soften global shocks while unlocking more consumption at home.

More significantly, the boom showed up in auto showrooms. Passenger vehicle sales in September rose 8 per cent from a year earlier to 370,000 units, industry data showed. The rebound was fuelled by pent-up demand from August and lower post-GST prices. The festive season, which began with Navratri on September 22, added momentum, helping dealers reduce stock and drawing more buyers in both urban and semi-urban markets.

Tata Motors posted a 45 per cent jump in domestic passenger vehicles, while Eicher Motors delivered record Royal Enfield sales, up 43 per cent. Tractor sales, often seen as a rural demand signal, surged too—Mahindra & Mahindra reported a 50 per cent rise.

Big names ride mixed fortunes

Maruti Suzuki, India’s largest carmaker, had logistics hiccups that dented wholesale numbers, but retail demand was robust with 200,000 deliveries and another 250,000 bookings in hand. Exports jumped 52 per cent, offsetting the domestic shortfall. Hyundai followed a similar pattern—up just 1 per cent at home but 44 per cent abroad.

Two-wheeler makers showed broad gains. Hero MotoCorp logged 5 per cent growth in domestic sales, while exports nearly doubled. TVS Motor’s sales climbed 11 per cent, with electric scooters adding momentum. Bajaj Auto posted a 48 per cent month-on-month rebound in motorcycles, underlining how sharply demand snapped back once GST cuts took effect.

Why autos matter

The auto industry is one of India’s largest employers and a heavyweight consumer of steel, rubber, and electronics. Strong demand here ripples through the broader economy—from small suppliers in industrial clusters to banks financing purchases. The rebound reassures investors that household spending, long a key growth pillar, remains resilient.

Fiscal balancing act ahead

Still, there are caveats. September’s inflows, though strong, fell short of April’s record Rs 2.4 lakh crore. With lower tax rates filtering through, collections may dip before stabilising. That could tighten fiscal space just as the government faces spending pressures on infrastructure and welfare.

For now, though, confidence is the dominant theme. With cheaper goods boosting sentiment, RBI upgrading growth, and companies reporting packed order books, the outlook is upbeat. For global investors fretting about slowing demand in the West, India’s 14o crore-strong market is showing it still has room to grow, upgrade, and trade up.

The coming months will test whether September’s rebound can sustain. But the signs are hard to miss—tax inflows are steady, auto plants are humming, and the economy looks primed for a festive-season boom.