RBI Rate Cuts to Boost Auto Sector and Consumer Demand 6x183u

By – Mr. Venkatram Mamillapalle, Country CEO & Managing Director, Renault India 

“The Reserve Bank of India’s decision to reduce the repo rate by 50 basis points to 5.5%, marking a cumulative 100 bps cut in recent months (25bps cut in Feb 2025, followed by 25bps in April 2025 and 50 bps in June ), is a welcome and timely move.

Combined with a significant 100 bps reduction in the Cash Reserve Ratio (CRR), which releases ₹2.5 lakh crore into the banking system, this policy is expected to strengthen liquidity and accelerate the transmission of lower interest rates to consumers, which will spur demand in the economy. For the automotive sector, this translates directly into improved access to affordable vehicle financing, especially in the entry and mid-level segments.

The reduction in I inflation forecast to 3.7% for FY26 will likely increase real disposable income, ing consumer sentiment. With private consumption already on a healthy trajectory and the festive season on the horizon, we expect this policy environment to drive demand further. Moreover, robust gross FDI despite global headwinds reaffirms India’s attractiveness as a long-term investment destination.

The RBI’s proactive measures are poised to spur automotive retail, enhance customer affordability, and strengthen the economic cycle. We are optimistic that FY2025-26 will see an upward growth trajectory for the auto industry, powered by favorable macroeconomic indicators, strong fundamentals, and evolving consumer confidence.”