After a challenging year marred by sluggish consumption and economic headwinds, India’s fast-moving consumer goods (FMCG) industry is showing early signs of recovery. Despite a lackluster festive season last year, industry leaders are cautiously optimistic that consumer demand will strengthen in the coming months.
Analysts predict a gradual rebound over the next 12 to 18 months, supported by a favourable monsoon, stable inflation, revised tax slabs, and potential pay hikes under the upcoming Pay Commission. In the January–March quarter, FMCG companies saw a 10.6% year-on-year value growth—driven largely by rural markets, which grew 11%, outperforming urban areas for the fifth quarter in a row.
To weather the slowdown, companies adapted pricing strategies by reducing pack sizes and tweaking price points to retain volume in a price-sensitive environment. Rural markets, now contributing over a third of FMCG sales, have emerged as the primary growth driver due to better monsoons and rising agricultural output. Traditional retail volumes rose to 6.2% in Q4 FY25, highlighting strong demand in smaller towns and villages. Rural demand will continue to be more than the urban demand in the coming months.
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The home and personal care segment led the recovery with 5.7% growth in Q4/25, while food categories, particularly staples like edible oils, lagged at 4.9% due to price hikes as compared to 6% in Q4/24. To diversify growth, FMCG players are focusing on newer categories like body wash, pet care, and deodorants.
E-commerce is also reshaping the landscape, especially in urban areas, challenging both modern and traditional retail formats. With rising online shopper penetration and changing consumption habits, brands must adapt quickly.
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Despite rural resilience, urban demand remains fragile due to high living costs, stagnant wages, and limited job creation. While policy measures aim to spur consumption, a sustained revival will depend on improving income levels and broader economic stability.
