From GST rationalisation and disposable income support to manufacturing incentives, omnichannel infrastructure and export enablement, India’s retail leaders see Union Budget 2026–27 as a decisive moment to convert consumption momentum into durable, broad-based growth
As India heads into Union Budget 2026–27, the retail sector—one of the country’s largest employers and most visible economic bellwethers—is watching closely. After navigating pandemic disruption, inflationary pressures and changing consumer behaviour, Indian retail is now firmly back on a growth trajectory. Yet, industry leaders believe the coming Budget will determine whether this recovery translates into long-term resilience.
Valued at over USD 900 billion and projected to cross USD 1.3 trillion by the end of the decade, India’s retail market spans everything from daily essentials to luxury fashion, beauty, jewellery and wellness. Organised retail, including modern trade, D2C brands and omnichannel players, now accounts for roughly 15–18 per cent of the market—a share that is steadily rising with digital adoption and urbanisation. Against this backdrop, expectations from Budget 2026–27 centre on consumption stimulus, tax reform, manufacturing depth and infrastructure that supports both physical and digital retail.
From recovery to resilient growth
Rahul Shanker, Group CEO of Quest Retail, which operates The Body Shop in India, frames the Budget as a strategic inflection point for retail. “The upcoming Union Budget presents a pivotal opportunity to transition from recovery to resilient growth,” he says.
Shanker points to the encouraging impact of recent GST reforms in personal care and expects the government to build on this momentum. “We are eager to see policies that incentivise sustainability and simplify the regulatory landscape,” he notes, arguing that compliance complexity disproportionately affects organised retailers investing in responsible sourcing, ethical supply chains and transparency.
Critically, Shanker highlights the next wave of retail growth. “The next frontier for India’s beauty and personal care industry lies in rural and Tier-2/3 markets; continued investment in digital infrastructure is the key to unlocking this diverse consumer base.” With more than 65 per cent of new online shoppers now coming from non-metro India, stronger broadband penetration, digital payments and last-mile logistics have become central retail enablers. Measures that bolster disposable incomes, he adds, can further fuel consumption and drive inclusive growth.
GST rationalisation: a cross-sector priority
If one theme cuts across retail categories—from beauty and fashion to jewellery and hygiene—it is GST rationalisation. While the introduction of GST unified India’s fragmented tax regime, industry leaders argue that rate structures remain misaligned with consumption realities.
Pradeep Goyal, Co-Founder of Glam21, believes Union Budget 2026–27 could mark a turning point for beauty retail. “We expect GST rationalisation on beauty products, which will make cosmetics more accessible for consumers and at the same time make compliance easier for brands like ours,” he says. With India’s per capita beauty spend still significantly lower than global averages, price sensitivity remains high, particularly in emerging urban and semi-urban markets.
Goyal also stresses the importance of incentives for domestic manufacturing and MSMEs. Such measures, he says, would not only support local production but actively propel creativity and innovation across the retail value chain. Financial support for digital commerce and export facilitation could, in his view, dramatically expand the reach and competitiveness of Indian retail brands.
Similar expectations come from lifestyle retail. Tabby Bhatia, Founder of Brune & BareSkin, says GST rationalisation for the lifestyle segment is critical for brands investing heavily in product development, branding and customer experience. “We are optimistic about Budget 2026 and its potential to support D2C and homegrown brands,” he says.
Bhatia links tax reform with India’s global ambitions. He hopes for a stronger push under the Make in India initiative, backed by incentives for domestic manufacturing and sourcing. Lower import duties on specialised ingredients, premium packaging and design-led components, he argues, would help Indian retail brands match global quality benchmarks. Simplified compliance norms and export-friendly policies could further enable brands to scale across physical retail and international markets.
Manufacturing, MSMEs and the retail supply chain
As retail becomes more organised and brand-led, the health of its manufacturing base has come into sharp focus. Fashion, beauty and lifestyle retailers increasingly depend on agile domestic supply chains to manage costs, control quality and respond quickly to trends.
Rohan Gupta, Managing Director and CFO of Gargee Designer’s, believes Budget 2026–27 should strengthen India’s fashion and luxury manufacturing ecosystem. “Rationalisation of GST on high-quality apparel and handcrafted products would significantly ease cost pressures and make premium Indian menswear more competitive, both domestically and globally,” he says.
Gupta also calls for enhanced incentives for MSMEs investing in skilled artisans, sustainable fabrics and modern production technologies. Improved access to working capital and export-focused incentives, he adds, could empower homegrown labels to expand internationally. “A budget that supports innovation, craftsmanship, and global outreach will not only boost the fashion industry but also create employment,” he notes.
Jewellery retail echoes these concerns. Dishi Somani, Founder of Dishis Designer Jewellery, says policy support for handcrafted and design-led jewellery is essential. She calls for GST rationalisation on handcrafted jewellery and greater clarity on compliance norms to ease operational challenges for homegrown brands.
“Budgetary support for MSMEs, especially women-led enterprises, along with easier access to credit, would enable brands to invest in innovation, skilled craftsmanship, and sustainable sourcing,” Somani says. Export incentives and participation in international trade fairs, she adds, could strengthen the global presence of Indian jewellery retail, reinforcing India’s identity as a hub for artisanal excellence.
Science-led beauty and the evolution of retail categories
Within beauty retail, one of the most significant shifts is the rise of dermatology-led and science-backed skincare. Shaily Mehrotra, Founder of Fixderma and FCL and a newly appointed Shark Tank India judge, points to strong growth in this segment. “India’s dermatology-led, pharma-backed skincare segment is witnessing strong growth, driven by rising awareness around ingredient science and clinically proven formulations,” she says.
Mehrotra believes continued Budgetary support for domestic manufacturing, R&D and formulation science will help Indian brands build globally competitive, evidence-based skincare solutions. For organised retail, this shift also means higher consumer trust, repeat purchases and the emergence of specialised retail formats spanning pharmacies, modern trade and digital platforms.
This evolution is further underscored by Sukhbir Singh Chimni, Founder of Ceuticoz. He notes that India’s cosmeceutical retail sector is undergoing a structural transformation, driven largely by consumer choice for dermatologist-recommended and clinically validated products.
“The industry anticipates stronger policy recognition of cosmeceuticals as an adjacent category to healthcare and not merely a beauty or lifestyle concern,” Chimni says. From a retail standpoint, GST rationalisation on science-backed skincare and clearer regulatory classification between cosmetic and therapeutic products would be crucial for affordability and expansion.
Chimni also highlights the need for targeted support to domestic manufacturing, R&D and export readiness to reduce reliance on imported actives. Parallel investments in omnichannel retail infrastructure—logistics, warehousing and digital enablement—especially in Tier II and III cities, would help extend access to preventive and therapeutic skincare where demand is rising rapidly.
Omnichannel infrastructure and non-metro India
The lines between physical and digital retail are increasingly blurred. Large-format stores, neighbourhood outlets, brand websites, marketplaces and social commerce now coexist in a single consumer journey. Industry estimates suggest that over 40 per cent of organised retailers in India now operate omnichannel models.
For Mubashshir Syed, Operations Manager at Maliao Cosmetics, policies that promote e-commerce, retail marketing and ease of doing business are vital. “GST rationalisation for cosmetics and personal care products, along with simplified compliance measures, would help reduce costs and improve accessibility across markets,” he says.
Syed adds that continued support for domestic manufacturing and MSMEs can further strengthen India’s beauty retail ecosystem. Export facilitation, he believes, will be key to helping Indian retail brands scale globally while retaining strong domestic roots.
Feminine hygiene: retail as a public health enabler
Retail’s role in public health also features prominently in Budget expectations. Shobhit Gupta, Senior Vice President – Finance at Pee Safe, argues that feminine hygiene and menstrual care must be viewed beyond sanitary pads alone.
While sanitary pads are GST-exempt, allied products such as toilet seat sanitisers, menstrual cups and intimate washes continue to attract GST, affecting affordability and adoption. Gupta recommends a rationalised GST structure across the broader feminine and preventive hygiene category.
He also calls for fiscal incentives for R&D, sustainable raw materials and domestic manufacturing of women-centric hygiene products, along with their inclusion in government health awareness and sanitation programmes. “Recognising and supporting feminine and preventive hygiene innovations through policy and taxation reforms can significantly improve everyday safety, dignity, and confidence for women across socio-economic segments,” he says.
A defining Budget for retail
As Union Budget 2026–27 approaches, India’s retail sector is not asking for short-term relief but for long-term alignment. Industry leaders want a policy framework that recognises retail as a critical engine of consumption, manufacturing, employment and exports.
With targeted GST rationalisation, stronger MSME and manufacturing incentives, investment in digital and physical infrastructure, and export-friendly reforms, retail leaders believe India can transform its vast domestic market into a globally competitive retail ecosystem.
For a sector that touches nearly every Indian household, Budget 2026–27 could well define how India shops, produces and consumes over the next decade.
