January 16, 2012
The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. The FMCG sector generated revenues worth US$ 27.9 billion in 2010. The industry expanded at a compound annual rate of 15.4 per cent during 2006-10.
Indian and multinational FMCG players can leverage India as a strategic sourcing hub for cost-competitive product development and manufacturing to cater to the international markets. The emergence of organised retail has boosted the distribution of FMCG sector. A total of 7.8 million retail outlets sell FMCG in India.
Industry has witnessed heavy foreign direct investment (FDI) inflows as they accounted for 2.1 per cent of the country’s total FDI during April 2000 - March 2010. Food processing is the most popular FMCG category; it attracts over 53 per cent of total FDI in the industry.
India currently allows 100 per cent FDI in cash and carry segment and 51 per cent in single-brand retail, which is expected to be further increased to 100 per cent. India is also expected to allow 51 per cent FDI in multi-brand retail, which will boost the nascent organised retail market in the country.
Leading players of consumer products have a strong distribution network in rural India and are looking to capitalise on rising brand consciousness. Technological advances such as internet and e-commerce would enable better logistics in these areas.
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