India FMCG Sector Growth: After facing challenges with growth and margins for a long time, the FMCG sector is slowly regaining its momentum. Good growth was seen in Q2 and Q3.

Good recovery seen in the FMCG sector of the country

India FMCG Sector Growth: The country's FMCG (Indian Fast-Moving Consumer Goods) sector is currently in recovery mode. Centrum Broking's Consumer Staples Coverage Universe reports that it is projected to grow 2% in the second quarter of fiscal year 2025-26 compared to the same quarter last year, and 7.5% year-on-year in the third quarter.

This growth was largely driven by a sharp increase in sales volume, excluding ITC. This suggests that the FMCG sector is slowly regaining its momentum after a long period of facing growth and margin challenges. According to the report, a decline in inflation, expectations of a good harvest due to a good monsoon, and government initiatives such as changes in GST and income tax cuts are all signaling increased demand, which is gradually improving the country's FMCG sector.

What problems arose in the second trimester? 

The October-December quarter saw some GST-related issues, such as the implementation of GST 2.0, which caused some disruptions in the supply chain as many distributors and retailers awaited the new rates. Consequently, inventories were reduced. This impacted companies' sales by 1-4.5 percent.

However, companies experienced strong exit growth during this period, further improving the outlook for Q4. The report states that the sector is benefiting from a shift in momentum. Restocking in Q3 provided some benefit, and volumes have also increased due to increased gramage. Centrum believes that coverage companies will see continued growth in both top line and volume.

Which segments saw recovery?

Industry experts say that rural markets are now outpacing urban markets. Quick commerce continues to drive growth. Citing the performance of Nestlé and Britannia, experts said the food category has seen a clear increase in volume momentum. Within the home and personal care (HPC) segment, the hair oil category has also seen a strong recovery.

This positive trend is expected to continue into the final quarter of the financial year. The report expects Q4 to benefit from increased summer loading and consumption, supported by a stable raw material basket. Despite minor headwinds in international locations like Bangladesh, overall sentiment remains positive as the industry moves from a stagnant phase to volume-led growth.