FMCG Sector Demands Budget Boost for Consumption, Rural Growth

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AuthorRiya Kapoor|Published at:
FMCG Sector Demands Budget Boost for Consumption, Rural Growth
Overview

India's FMCG companies are urging the government to prioritize consumption growth and rural development in the upcoming Union Budget. Key expectations include sustained capital expenditure, targeted tax reforms, and support for manufacturing and entrepreneurship. Industry leaders also propose reducing GST on specific home care products from 18% to 5% to stimulate demand, vital for India's consumption-led economy where rural demand is currently outpacing urban.

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FMCG Sector's Budget Wishlist

FMCG companies are calling for specific measures in the upcoming Union Budget aimed at sustaining consumption growth and accelerating rural development. Industry leaders emphasize the need for continued government focus on infrastructure, manufacturing, and employment creation to bolster economic momentum.

Driving Consumption Through Policy

Saugata Gupta, MD & CEO of Marico Ltd., stated that targeted tax reforms, continued capital expenditure, and policies fostering entrepreneurship and innovation are crucial. He noted that government interventions in infrastructure and ease of doing business have improved the economic environment.

Sudhir Sitapati, MD & CEO of Godrej Consumer Products Ltd., echoed the sentiment, highlighting "efficient measures to boost consumption" as the industry's primary expectation. He suggested higher allocations for infrastructure linked to labor and water-intensive categories.

GST Reform for Demand Stimulation

A specific proposal from the sector involves reducing the Goods and Services Tax (GST) on mass-consumption home care products. Currently taxed at 18%, these categories could logically move to a lower slab of 5% to directly support demand.

The Federation of Indian Chambers of Commerce & Industry (FICCI) memorandum underscores the significance of Private Final Consumption Expenditure (PFCE), which accounts for over 56% of India's GDP. This highlights how household consumption remains the primary engine of growth in the nation's consumption-led economy.

Rural Demand Takes Center Stage

Rural demand has consistently outpaced urban consumption for the past seven quarters. However, Praveen Jaipuriar, CEO of CCL Products (India) Ltd., cautioned that rural consumption, while resilient, requires ongoing policy support amidst monsoon risks and inflationary pressures.

Looking forward, the industry hopes Budget 2026 will strengthen agricultural and dairy infrastructure, support rural development initiatives, and encourage the adoption of modern technology. The full benefits of GST 2.0 are expected to become more visible in the March quarter.

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