Jan 30 (Reuters) - Nestle India posted a 46% increase in quarterly profit on Friday, aided by higher demand for packaged food items, including Maggi noodles and KitKat chocolates, after consumption tax cuts lifted spending.

The Indian unit of Swiss food major Nestle said net profit rose to 10.18 billion rupees ($110.77 million) for the third quarter ended December 31, from 6.96 billion rupees a year earlier.

Shares rose as much as 4% to their highest since October 2024.

Demand has been gradually improving in India as a sustained moderation in inflation and the government's income and consumption tax cuts increase appetite for discretionary spending.

The tax reductions have helped consumer firms overcome a quarters-long slowdown in urban demand, which has been hit by weakening wage growth.

Nestle India's third-quarter revenue grew nearly 19% to 56.67 billion rupees, as its KitKat and Munch chocolate brands logged double-digit volume growth, driven by new launches, a bigger rural push and rising demand on quick-delivery platforms.

The company posted record sales and its strongest volume growth in nearly five years, led by a market recovery following the tax cuts and its investments in boosting production and advertising, Chairman and Managing Director Manish Tiwary said.

He did not quantify the volume growth.

Peers including Godrej Consumer Products and ITC have reported lower quarterly profit, hit by a charge tied to India's new labour codes, but Nestle India only recorded a relatively small charge linked to it.

Procter & Gamble's Gillette India, too, said it did not see a material impact as its current salary structure was already in line with the requirements.

($1 = 91.9000 Indian rupees)

(Reporting by Komal Salecha in Bengaluru and Praveen Paramasivam in Chennai; Editing by Sonia Cheema)