Policy tailwinds, tax-relief and GST reform to drive FMCG growth in 2026: Experts

The Indian fast-moving consumer goods (FMCG) industry is entering 2026 with cautious optimism, expecting high single-digit volume growth, improved margins, and a revival in urban demand, aided by policy tailwinds, tax relief measures, Goods and Services Tax (GST) reforms and benign commodity prices.

Industry leaders suggest that easing of inflation is likely to support gross margin expansion, allowing companies to step up investments in advertising—long considered the lifeblood of FMCG. However, firms will also need to reassess their media strategies as traditional platforms lose relevance amid shifting consumer media consumption patterns across age groups.

Companies are expected to increase investments in technology, including automation, analytics, AI-led demand forecasting, supply chain optimisation, and personalised consumer engagement. Quick commerce deliveries, ranging from same-day to 10 to 30-minute delivery, are emerging as a critical pillar of omnichannel growth strategies.

Harsha Vardhan Agarwal, Emami Vice Chairman and Managing Director, said: “Digital-first, personalised, and performance-led platforms have gained prominence, while traditional mass media has gradually lost relevance and efficiency,” adding that FMCG companies are reworking media mixes, content formats, and engagement strategies.

Premiumisation is expected to continue, but more selectively, with consumers prioritising quality, indulgence, and wellness. Categories offering differentiated benefits are likely to outperform, executives said.

“For the broader FMCG industry, 2026 is shaping up to be a more favourable year, supported by easing inflation, benign commodity trends, tax relief measures, higher government capex and a more accommodative monetary stance,” Agarwal added.

He expects a gradual recovery across rural and urban markets, continued premiumisation and further share gains for organised retail, ecommerce, D2C, and quick commerce channels.

Mohit Malhotra, CEO of Dabur India, said, “For our company, we anticipate recovery in the second half of FY26 (October 2025 to March 2026), setting the stage for double-digit growth in FY27.”

He added that India’s FMCG landscape is undergoing structural change, driven by rising affluence, rural demand, a strong demographic dividend and technological advances. India’s young population, particularly Millennials and Gen Z, are reshaping consumption patterns towards experiential and lifestyle-led spending.

“With rising incomes and a growing middle class, demand for premium and high-quality products is increasing, especially in urban India. This trend is more visible online,” Malhotra added.

Godrej Consumer Products MD and CEO Sudhir Sitapati, however, flagged concerns over persistently slow volume growth in the sector. “FMCG volume growth has been 4 to 5%, while GDP has been 7 to 8%. That’s been puzzling.”

Sitapati added that consumption growth has lagged GDP, with rural markets outperforming urban areas in recent quarters. He also said that urban demand could benefit more from GST 2.0, as many consumption categories are urban-centric, and added that both GST and income tax reductions should support demand going forward.

Marico MD and CEO Saugata Gupta described 2025 as a ‘year of decisive transformation’ for the sector, marked by income tax and GST reductions and benign inflation.

Rural consumption rebounded strongly, alongside premiumisation in urban markets, he added.

“Looking ahead, demand fundamentals remain strong, rural recovery is gaining momentum, and new-age consumption is being shaped by digital adoption, accessibility and premiumisation,” Gupta added.

Anand Ramanathan, Partner and Consumer Industry Leader at Deloitte India, said ecommerce penetration will deepen further, especially in smaller towns and rural areas.

“Quick commerce and social commerce will continue to disrupt traditional models, while omnichannel maturity will enable unified experiences and flexible fulfilment,” he said.

Rajiv Kumar, Vice Chairman, DS Group, said that the company has crossed Rs 10,000 crore in turnover, and now expects healthy margins and robust revenue growth in 2026, supported by recovering urban demand and resilient rural consumption. He cautioned, however, about competition from regional and D2C brands, monsoon risks and structural shifts in ecommerce.

Naveen Malpani, Partner and Consumer and Retail Industry Leader, Grant Thornton Bharat, said investment activity in FY26 is likely to remain selective but positive, with capital flowing into premium, wellness, home solutions and fast-moving discretionary categories, as well as supply-chain technologies and quick commerce-linked infrastructure.