India’s FMCG sector is entering a cautiously optimistic phase as disruptions from the GST transition begin to ease. With several food and beverage categories now taxed at 5%, industry leaders believe GST-led formalisation and higher disposable incomes could support a gradual recovery in consumption, particularly in essentials. However, executives remain clear that the benefits will unfold unevenly and become more visible only over the coming quarters.
A key structural shift underway is the narrowing gap between unbranded and branded products. Falling inflation and tax rationalisation are improving affordability, nudging consumers towards organised players, even as price sensitivity persists among lower-income households. This environment is also accelerating reinvention, with large FMCG companies aggressively expanding into healthy and functional food categories to counter nimble, startup-led challengers.
On the macro front, retail inflation remains historically low despite a marginal uptick in November, supported by declining food prices. While GST reforms are expected to further soften inflation, the FMCG sector is yet to fully capture the demand uplift, as consumer spending has so far skewed more towards discretionary durables than everyday staples.
Click on the headings below for insights on how these trends are shaping India’s retail landscape…
1. FMCG set for growth as GST transition issues wind down
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.
2. Big FMCG players bet on India’s healthy food boom, with market seen reaching Rs 20,000 crore
India's fast-moving consumer goods (FMCG) companies are in the midst of a steady reinvention, borrowing tactics from young home-grown startups, challenging their dominance. From Tata Consumer to Hindustan Unilever, Nestle India, and Britannia Ltd, the country's largest food companies are aggressively expanding into "healthy food" categories, responding to the rapid rise of small brands that have tapped into the anxieties and aspirations of a new generation of health-conscious consumers.
3. Falling inflation, GST reset narrowed gap between unbranded and branded FMCG, says Marico CEO
A sharp drop in inflation and the goods and services tax (GST) reset are structurally improving affordability, encouraging a gradual shift from unbranded to branded products, particularly in packaged foods, Marico managing director and chief executive officer Saugata Gupta said. The narrowing price gap is beginning to support organised players, even as demand recovery remains uneven and lower-income consumers continue to calibrate discretionary spending, he added.
4. Retail inflation may reduce by 35 basis points in FY25-26; driven by GST reforms: Report
GST reforms could lower retail inflation by up to 35 basis points in 2025-26, with the impact already visible in recent months, according to a report by SBI Research. The report, cited by news agency ANI, estimated that Consumer Price Index (CPI) or retail inflation declined by around 25 basis points during the September–November 2025 period due to extensive GST rate adjustments. SBI Research had earlier projected that GST changes could influence CPI inflation by as much as 85 basis points.
5. Retail inflation quickens marginally to 0.7% in Nov. 2025, still second-lowest since Jan. 2012
Retail inflation in India quickened marginally to 0.7% in November 2025, up from the historic low of 0.25% in October 2025, with a continued contraction in food prices offsetting a marginal acceleration in fuel inflation. November’s inflation rate is the second-lowest ever recorded in the current series of the Consumer Price Index (CPI).
6. Cars, TVs over clothing, food: FMCG companies yet to see GST gains
It has been nearly three months since the new GST rates have kicked in but the fast-moving consumer goods (FMCG) sector is yet to see the full impact of the benefits of the tax cuts that drove down prices of a host of essentials. There have been some signs of demand revival, but the extent of the growth will be clear in the coming quarters, said industry executives.