Indian FMCG CEOs See GST 2.0 as Defining Moment for Consumption Growth

A GST -led formalisation and more disposable incomes in the hands of people could support consumption growth, particularly in foods, some of the country’s top FMCG CEOs said at the CII FMCG Summit held in Mumbai on Monday. The government consolidated its four-tier GST rate structure into two – 5% and 18% – in September, shifting a number of FMCG products including food & beverages into the 5% tax bracket. While GST transition issues have hurt performance of companies in the last couple of months, that has wound down now, CEOs said. “A lot of us feel that GST 2.0 can be a defining moment for Indian FMCG. This is both from a consumption perspective as well as the reform bringing a more level playing field for small and large players,” Sudhir Sitapati, MD & CEO, Godrej Consumer Products (GCPL), who is also the chairman of the CII National Committee on FMCG, said. While GST-induced price cuts in categories such as durables and cars saw an immediate impact on sales, the benefits for FMCG will emerge over time. “Growth will be anchored on affordability and availability, along with the steady shift from unbranded to branded consumption,” Saugata Gupta, MD & CEO, Marico said. Rural and small towns remain a steady pillar of growth, Ravi Swarup, partner and consumer products practice head, Bain & Company, added, as urban demand remains mixed for now. Data from retail intelligence platform Bizom bears that out: FMCG value growth between urban and rural widened in November, as urban growth was soft at 2.5%, even as rural growth was strong at 5.7%. In October, urban growth had reported a sharp rebound of 6.3%, while rural growth was 7.1%. Sudhanshu Vats, MD, Pidilite Industries and co-chairman of the CII National Committee on FMCG said that the monetary and fiscal measures announced during the calendar year 2025 along with the GST 2.0 reforms had created immediate headroom for discretionary spending in FMCG. But success, he noted, would depend on R&D and innovation tailored for India, as most global solutions do not work here directly. “Companies also need to engage the full consumption pyramid to be able to capitalise on the growth opportunity in the sector,” he said. Vats also cautioned about segmenting the market on organised and unorganised lines, saying small players deserved respect as many had seen consistent growth, even as large players struggled over the last few years in terms of growth. “India today has hyperlocal, regional, national and MNC players. While growth is significant, it must be approached like a marathon,” he said. Kumar Venkatasubramanian, CEO & MD, P&G India, said that he saw a significant penetration opportunity as consumption trends change. “In markets like the Phillippines, consumption is one diaper a day. In urban India, it is one in two days. In rural India, it is one in two weeks. For instance, moving rural consumption closer to urban levels creates a massive penetration opportunity,” he added.