Context: The fast moving consumer goods (FMCG) industry is expected to clock double digit growth in the current year, though the growth is likely to be lower than that of the previous year, which saw the sector benefit from the overall health of the economy and lower inflation.

Consumption growth in 2018 was led by favourable macros like growth in GDP, lower inflation and manufacturers passing on the benefits of margin expansion from the GST regime.

Overview of FMCG sector:

Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with Household and Personal Care accounting for 50% of FMCG sales in India. Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector.

Investments/ Developments:

The government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand retail and 51% in multi-brand retail. This would bolster employment and supply chains, and also provide high visibility for FMCG brands in organised retail markets, bolstering consumer spending and encouraging more product launches.

Some of the major initiatives taken by the government to promote the FMCG sector in India are as follows:

1. Consumer Protection Bill with special emphasis on setting up an extensive mechanism to ensure simple, speedy, accessible, affordable and timely delivery of justice to consumers.
2. The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG products such as Soap, Toothpaste and Hair oil now come under 18 per cent tax bracket against the previous 23-24 per cent rate.
3. The GST is expected to transform logistics in the FMCG sector into a modern and efficient model as all major corporations are remodeling their operations into larger logistics and warehousing.