The Fast Moving Consumer Goods (FMCG) industry in India has a vital contribution to its economy. With a 20% contribution to the Indian Economy, FMCG is the fourth largest sector in India. FMCG, also known as Consumer Packaged Goods (CPG), is an industry of products like cosmetics, household goods, electronic items, packaged and processed food, etc. With the rapid growth in the past few years, it is estimated that the Indian FMCG sector will record a growth rate of 10 to 12% in 2022. Even during the global pandemic, this industry had shown great innovation and adaptation to provide goods to the consumer.
Even during the second wave of Covid-19, the industry observed an approximately 36.9% growth during 2021. This happened due to various aspects, one of them being the rapid growth and adaption of e-commerce for shopping even daily essentials. In India, people started using WhatsApp to conduct their grocery businesses. This helped the industry to keep growing during this difficult phase.
Another important factor that resulted in a flourishing Indian FMCG industry, is the government policies and the Foreign Direct investments (FDI) in the sector.
Reasons for Growth of FMCG sector in 2023
The popularity of E-commerce: During the pandemic, global supplies were devasted because of the lockdowns worldwide. People were unable to buy necessary items because they were locked inside their homes. At that time, people in India innovated ways to help each other. The local Kirana shops started their model of E-commerce selling using WhatsApp. Major e-commerce players like Amazon and Flipkart also used it as an opportunity and started selling FMCG products online. Start-ups like Zepto entered the game with innovations like 10 minutes delivery. Big companies started using modern digital technologies like Big data, AI, etc. to predict consumer patterns regarding FMCG products. All this contributed to the growth of the FMCG sector.
Government Policies and FDI: The Government of India is playing a catalyst in the growth of this industry. The policies and the increase in Foreign Direct Investments (FDI) have played a vital role in flourishing this industry. Now, 100% FDI is permitted in the food processing category by the government. This Massive FDI inflow has helped the industry in many ways. It has improved operations and increased employment in the FMCG sector. And from time to time, the government will encourage FMCG to grow more by introducing more policies and initiatives.
To conclude, the FMCG market is expected to have a positive run in the future. But, some threats can hamper this growth like inflation, and disruption of supply chains due to incidents like wars and pandemics.