Enabling Factors: Digital, Credit, and Policy

1. Digital Payments Penetration: UPI continues its dominance. In FY25, UPI recorded 185.8 billion transactions, growing ~41.7% over FY24, and capturing ~83.4% of transaction volume in India’s digital payments ecosystem. UPI’s increasing share means that festival consumption has an efficient, transparent payment conduit. Also, UPI’s ubiquity supports inclusion in smaller towns and rural areas.
2. Tax & Policy Tailwinds: The BoB report explicitly cites recent GST rate cuts as a booster to consumer sentiment and spending capacity. Lower indirect tax burdens amplify demand for discretionary goods.
3. Credit & Embedded Finance: Although I did not locate a credible data source that quantifies BNPL or festive credit growth in 2025, fintech commentators and KPMG/industry reports frequently note that Buy Now, Pay Later (BNPL), embedded lending, and instant credit schemes accelerate large-ticket purchase conversion during festivals.
4. Logistics & Last-Mile Reach: As logistics networks mature and cost of delivery declines, penetration into Tier-II/III towns becomes more viable. This allows brands to extend festival offers deeper into the hinterlands, unlocking new consumer segments.

Key Sectors Benefiting from the Festive Season

Below are major sectors that typically dominate festival-era consumption — with notes on investment plays and risks.

1. Automobiles — the classic big-ticket beneficiary

Lower taxes on small cars and attractive EMI/finance offers translate directly into higher showroom traffic and conversions. Automakers often run festival-specific price campaigns and extended warranty/finance bundles that push demand forward. Reuters and several market outlets flagged auto as an early winner in 2025 thanks to tax shifts and manufacturer price moves. For investors, auto OEMs and select component suppliers merit attention during a festive uplift — but watch inventory days and channel restocking, which can create later headwinds. 

2. Consumer electronics and appliances

TVs, refrigerators, washers, and smartphones are perennial festive buys, often spurred by platform-led sales on e-commerce and in-store EMI offers. Reports from e-commerce trackers and industry bodies show double-digit festive uplift for premium electronics in 2025, benefiting both large-format retailers and listed electronic brands. E-commerce platforms also reported strong festival traffic and higher ticket-size across select categories. 

3. Apparel, footwear and textiles

Clothing is a festival staple — and in 2025 multiple outlets noted strong demand for apparel across tier-1 and tier-2 cities. Lower GST for some price bands and wedding-related purchases (a big seasonal driver) further add to demand. This helps organized retail, large brands, and certain textile clusters that still cater to local festival orders. 

4. Jewellery — cultural demand plus gifting

Gold and jewellery spikes have long been tied to auspicious dates. Even when prices are elevated, the cultural imperative — weddings, gifts, family purchases — keeps the category resilient. Retail jewellers, NBFCs offering gold loans, and listed refiners or jewellery chains are typical beneficiaries. Several regional reports in 2025 reported steady jewellery sales despite price volatility. 

5. E-commerce and omni-channel retailers

Online platforms convert festive intent into sales via deep discounts, flash deals and financing tie-ups. Festive campaigns lift new customer acquisition and basket sizes — a one-two punch for platform revenues. IBEF and industry trackers flagged sizeable festive uplifts for online channels in 2025. For investors, this means both marketplace operators and logistics/warehousing providers see tailwinds. 

6. FMCG, gifting and packaged foods

Sweets, packaged gifts, and FMCG staples see volume bumps during festivals. MSMEs and local manufacturers also profit, and the surge helps channel inventory turnover. Analysts noted that while some FMCG categories are excluded from headline BoB estimates (which focused on discretionary items), the category’s cumulative impact on rural and urban demand is still material. 

Consumer Spending Trends During Indian Festivals

1. Digital Payments Dominate

• UPI’s share of total digital payments reached ~83% in 2024 (as per Business Standard).
• In FY25, UPI processed 185.8 billion transactions, a 41.7% jump over FY24, and solidified its dominance in India’s payment landscape (as per Business Standard.
• NPCI’s UPI product statistics (e.g., 19,467.95 million transaction volume in July 2025) underscore the scale (as per NPCI).

2. Tier-II / III / Non-Metro Consumption Rise

• Market coverage and digital inclusion are pulling more consumption from beyond metros. Many industry writeups (though not all verified) report that over 60% of new online shoppers during festivals come from smaller towns.
• Because logistical reach and digital literacy have expanded, brands are now actively targeting non-metro segments during festival sales.

3. Credit & BNPL Activation

4. Premiumization & Conscious Consumption

5. Time-Shifting of Purchase Behavior