India has proposed cutting the Goods and Services Tax on small petrol and diesel cars to 18% from 28%, according to a government official familiar with the discussions. The move is part of a broader package of consumption-tax reforms that Prime Minister Narendra Modi flagged last week as a potential “Diwali gift” to consumers and is aimed at bolstering demand amid the threat of higher U.S. tariffs. Equity investors welcomed the plan. The BSE Sensex climbed about 1,168 points in morning trade, while the Nifty 50 breached the 25,000 mark for the first time. Auto makers led the advance: the Nifty Auto Index jumped roughly 4% to a 10-month high, with Maruti Suzuki gaining around 6% and Hero MotoCorp up about 7%. Shares in consumer-durable and fast-moving consumer-goods companies also rallied on expectations of wider GST reductions. Bond markets were less sanguine, with the benchmark 10-year yield rising roughly five basis points amid worries that lower indirect taxes could pressure public finances. Government officials told Reuters they remain confident of meeting the fiscal-deficit goal for the year, arguing that stronger growth from higher consumption will partly offset the revenue hit.