Indian retailers hope to boost disappointing consumer spending with a frenzy of special offers during this week's Diwali festival, led by automakers crowding the market with nearly 20 new cars.

Diwali, the Hindu festival of lights, has always been an auspicious time to splurge, sparking an annual race between retailers to provide the most attractive offers.

But in this year's flagging economy, overcoming consumers' trepidation may prove to be a difficult task.

"I haven't seen so many product launches in a short span of days ever," said Ankur Bisen, vice-president in retail with Technopak, an Indian consultancy firm.

"Cars, luxury jewellery, watches, tablets, iPads, even Microsoft's Windows 8, retailers are trying new product launches to attract consumers," he told AFP.

Months of gloom for the Indian economy have brought consumer spending down to seven year lows, according to the Fitch ratings agency, so businesses are desperately seeking a kickstart.

This Diwali, Indians will be lured into buying from an impressive range of small cars, sedans, utility and luxury vehicles launched by auto giants such as Ford, Maruti Suzuki, Mahindra Ssangyong, BMW and others.

Auto dealers are offering a twin attraction – higher discounts on cars bought and better exchange prices for old cars – to boost what has been a forgettable year for India's car market amid rising input and fuel costs.

Electronics giant LG has "blissful offers" to woo customers, giving away a range of Blu-ray players, camcorders or glasses – all 3D versions – free with selected high-end 3D smart televisions.

Rival Samsung is offering a free Galaxy 7.0 tablet with the purchase of certain smart TVs, refrigerators or washing machines, while the hot-selling iPhone5 has also hit the shelves this month.

Indian banks, struggling with bad debts, are also trying to cash in.

State Bank of India, the country's largest commercial bank, has cut its processing fee on home and auto loans by half, for loans borrowed between mid-October to the end of the year.

Others have taken similar steps to remain competitive and some have slashed their auto or home loan rates, despite the central bank's tight monetary policy, analysts said.

Companies are hoping their eye-catching offers will tap India's expanding middle-class as it fast moves to a more Western-style consumer economy, but the Diwali spending rush has its roots in traditional India.

"October is the start of the agricultural new year and generally festivals are times to 'bring in the new'," said Mahantesh Sabarad, auto analyst with Fortune Equity Brokers.

With each festive season, the demographics of shoppers are quickly changing as more and more young people and women join the workforce, giving them disposable incomes to spend as they wish on mobiles, jeans and pizzas.

"It's a no-brainer that Diwali will be competitive," said Pramod Gubbi, vice-president at Mumbai's Ambit Capital, as firms vie for these new consumer groups' attention.

But the rush of discounts and offers still may not be enough to get consumers opening their wallets for pricier items in the current climate.

A range of factors – rising fuel prices, food inflation, job uncertainties and muted wage hike expectations – are likely to hurt buying decisions, said Deep Mukherjee, director with India Ratings and Research, a Fitch group firm.

"Big ticket items like autos, luxury products, vacations, may face a challenging demand condition," Mukherjee said.

Even gold-buying, which usually peaks in Diwali and continues through to India's wedding season in December, is looking muted.

Jewellery showrooms around Mumbai's Zaveri Bazaar have remained half-empty during the festive season so far, with the price of gold close to record highs.

B. Mahesh, an executive in a textile export firm, said he had "reconciled to not splurging this Diwali".

"I usually buy three branded pairs of shoes each year, one always in Diwali. But now I'm going to look for cheaper footwear. I do not see a Diwali bonus coming and prices are just too steep," he said.