Recent Developments in FMCG

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The FMCG Sector in India has witnessed a range of recent developments. Tax deductions on various items, rise in the penetration levels and per capita consumption are some of the major developments in FMCG.

FMCG Sector in India - A Brief Note

The FMCG Sector in India is the fourth largest sector in the Indian economy. As per the reports of the 2005-06 financial year, the market size of the sector was registered as USD 13.1 billion. The FMCG Sector in India involves a strict competition between the organized and unorganized sector of consumer durables.

India offers an abundance of raw materials, low-priced labor costs, and also has a presence across the entire value chain. The market size of the Indian FMCG Sector is expected to reach USD 33.4 billion by the year 2015. Some product categories such as jams, toothpaste, skin care products, hair care products, etc have experienced a low per capital consumption as per a report presented in 2006.

As per the recent developments in FMCG it is assumed that the consumption of the FMCG products will have a satisfactorily growth with the rising income level of Indian populace in both the rural and urban areas. Around 200 million people are expected to become the consumers of processed and packaged foods by the year 2010.

The major activities of the food-processing sector are permitted 100% foreign equity or 100% NRI and Overseas Corporate Bodies (OCB) investment to meet the rising demand of the consumers.

Recent Developments in FMCG Sector in India

  • Finance Minister, Mr. P. Chidambaram declared several tax sops for the FMCG sector in India along with putting due emphasis on the infrastructure developments in the same

  • The usual growth drivers such as penetration, per capita consumption, population, and household income were quite strong in 2007 and also the consumption of the FMCG products has been increased outstandingly in 2007

  • Biscuits worth ` 50 per kilogram are fully exempted from excise duty, customs duty on food processing machineries were reduced from 7.5% to 5%, excise duties on food mixes were reduced from 16% to 8%, and taxes were reduced on edible oils. ITC, Dabur, HUL and Marico were directly benefited from these

  • The consumption of health and personal care products in FMCG sector has increased in the recent past with rise in disposable income especially among the youth group in India

Last Updated on 3/16/2011