India’s retail and FMCG sector is navigating a complex mix of policy shifts, rural resilience, and global uncertainties. Inflation is expected to have inched up to 2.1% in August, ending a nine-month easing trend as food and gold prices rise, though it remains well below the RBI’s 4% target. Meanwhile, FMCG companies are urging the government to permit the sale of existing stock at revised GST rates to avoid packaging waste worth over ₹2,000 crore once new tax slabs take effect this month.
Rural India continues to dominate the narrative, driving FMCG growth through affordable premium products, from health snacks to natural personal care, and now contributing more than half of volumes. Kantar’s latest report confirms this rural momentum has outpaced urban consumption for five consecutive quarters. Alongside, brands are investing in AI-led advertising to sharpen efficiency and scale campaigns faster, underscoring how technology is reshaping India’s consumer market even amid regional challenges like Nepal’s unrest.
Click on the headings below for insights on how these trends are shaping India’s retail landscape…
1. India's retail inflation likely rose in August as base effects fade: Reuters poll
Economists predict India's consumer inflation rose to 2.10% in August, ending a nine-month decline due to fading base effects and rising food prices. While still below the RBI's 4.0% target, the increase is attributed to a pickup in food prices, particularly vegetables, and a rally in gold prices. Wholesale price inflation is also projected to have climbed to 0.30%.
Consumer goods companies have urged the government to allow them to sell products with existing packaging at a reduced price once new GST rates come into effect on September 22, aiming to avoid wastage of packaging material worth over Rs 2,000 crore.
3. Rural India drives FMCG premiumisation beyond essentials with health brands
Rural India, once seen as a market for low-cost staples and sachets, is now emerging as a powerful growth engine for premium fast-moving consumer goods (FMCG). Consumers in smaller towns and villages are showing a clear appetite for quality and lifestyle-led products ranging from healthy snacks and nutrition supplements to natural personal care.
4. Indian consumer goods firms brace for Nepal unrest impact
Indian consumer goods companies, including Varun Beverages, Dabur, ITC, Marico, and HUL, are closely monitoring the impact of Nepal's political unrest on their businesses. These companies, along with Reliance Consumer Products and Bikaji Foods International, have significant operations in Nepal. The primary concern is the safety of partner teams due to Nepal's proximity to India.
5. Rural India to drive FMCG recovery in fourth quarter, says Kantar's K Ramakrishnan
Kantar’s Kharcha 3.0 report points out that India’s FMCG market is seeing rural regions drive growth by embracing affordable premium products, now accounting for over half the volume share. The report also shows rural consumption outpacing urban for the fifth straight quarter, with rural volumes rising significantly faster.
6. Why India’s FMCG giants are betting big on AI-led advertising
India’s FMCG majors are ramping up AI-led advertising, using it for content, targeting, and faster campaign rollouts. From Godrej’s in-house AI labs to HUL’s “Sangam” platform that cuts media planning time to five days, brands are betting on AI to sharpen efficiency and creativity.
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