November 29, 2012
The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. The FMCG sector generated revenues worth US$ 34.8 billion in 2011. The industry expanded at a compound annual rate of 17.3 per cent during 2006-11.
The urban FMCG market in India has been growing at a fairly steady and healthy rate over the years; encouragingly, the growth in rural markets has been more fast-paced. During FY11, more than 80 per cent of FMCG products posted faster growth in rural markets as compared to urban ones. Notable high growth sectors include salty snacks, refined edible oil, healthcare products, iodised salt, etc.
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.
Industry has witnessed heavy foreign direct investment (FDI) inflows as they accounted for 1.8 per cent of the country's total FDI during April 2000 - February 2012. Food processing is the most popular FMCG category; it attracts over 44.9 per cent of total FDI in the industry.
India currently allows 100 per cent FDI in cash and carry segment as well as single-brand retail. 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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