As India moves through its festive season, the country’s FMCG landscape is defined by both optimism and caution. The Diwali period continues to fuel innovation and emotional connection, with brands launching new products, campaigns, and gifting ideas that resonate deeply with consumers. However, the transition to the new GST regime has introduced short-term trade disruptions, with distributors seeking clearer compensation mechanisms and companies adjusting operations to new pricing structures.
Despite these logistical challenges, FMCG majors are setting ambitious targets for the second half of FY26, buoyed by stronger consumer sentiment and the spending boost from GST reforms. Tier-2 cities are outpacing metros in consumption, showing that India’s next wave of growth is emerging from beyond the metros. Yet, caution remains the dominant mood, households continue to feel the pinch of constrained budgets, reminding brands that value, accessibility, and emotional trust remain the real currencies of consumer loyalty.
Click on the headings below for insights on how these trends are shaping India’s retail landscape…
1. Festive season fuels brand innovation and emotional connection, say FMCG leaders
India’s festive season continues to be the most important period for consumer brands, driving both emotional connection and innovation across categories. Industry leaders say the weeks around Diwali offer companies a unique opportunity to deepen their relationship with consumers while experimenting with new products and gifting ideas.
2. FMCG distributors push companies for clear guidelines to smooth GST transition
Distributors of fast-moving consumer goods have written to large FMCG companies, asking them to issue clear written guidelines and establish compensation mechanisms (such as credit notes, price protections, or inventory adjustment plans) before the new Goods and Services Tax (GST) rates kick in on 22 September.
3. FMCG firms set ambitious targets as GST reforms spur consumer spending
With consumers in both urban and rural areas showing greater flexibility in spending, driven by GST reforms and easing inflation, Fast-Moving Consumer Goods (FMCG) companies have begun setting more ambitious growth targets. Firms want to utilise the enhanced consumer spending by developing products and solutions that align with evolving consumer preferences while contributing to a responsible and resilient supply chain.
4. From Snacks to Health: FMCG volume growth slips to 3.9% in Q3 FY25; Tier-2 cities outpace Metros
FMCG volume growth in India slowed to 3.9% in FY25, marking five consecutive quarters below 5%. Price hikes in key categories like cocoa, coffee, and palm oil impacted demand, while households prioritized staple and high-spend items. Tier-2 middle-class consumers led in FMCG consumption
5. The festive rush: How FMCG sector is driving Diwali purchases and demand
As Diwali celebrations light up homes and streets across India, the festive spirit is visible in shoppers’ baskets too. From kitchen essentials to sweet treats, the ongoing festival season has brought a notable boost to the fast-moving consumer goods (FMCG) sector, with companies reporting strong sales across categories. The ongoing festive season has triggered a surge in demand as consumers line up the stores in search of gifts and essentials. Lower price tags, following the recent Goods and Services Tax (GST) cuts, have further encouraged spending.
6. Cautious Consumers and Constrained Budgets Define FMCG Landscape in 2025: report
Looking ahead, consumer caution is likely to persist, with households remaining constrained by stretched budgets — and they don’t see it improving soon. The near future belongs to restraint, not significant revival, according to the FMCG Pulse Q3 2025 Report released by Worldpanel by Numerator.
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