More Stories

Informist, Friday, Jan. 2, 2026

 

By Avishek Rakshit

 

KOLKATA – Aided by the cut in goods and services tax rates in September, fast-moving consumer goods companies are likely to have recorded higher volume growth in Oct-Dec. This, however, is unlikely to have improved their financial performance for the quarter.

 

Industry officials are of the view that though the sector may have registered 9-11% growth in volume in Oct-Dec on a year-on-year basis, its revenue growth may largely be at a level similar to that seen in the year-ago period, rising just 1-2% on year for some categories. For the third quarter of the financial year 2024-25 (Apr-Mar), the consumer goods industry in the country had registered volume growth of 7.1% on year and sales growth of 10.6% on year, according to market intelligence company Nielsen IQ.

 

The dichotomy is on account of the GST rate cut. A senior official from a leading bakery company in Kolkata said companies passed on the benefit of the rate cut to consumers by increasing the product grammage or pack size. "But the uptake or unit sales is more or less in tandem to what we saw last year," the official said. "It has not increased much but has not declined as well."

 

Essentially, what industry officials believe is that with companies increasing the grammage in packs to pass on the benefits of the GST cuts to consumers, the sector registered higher volume growth but unit sales remained largely constant. "There were price cuts as well which were taken on larger pack sizes," the official from the bakery company said. "As a result, I don't see the revenue growth for the December quarter outpacing the year-ago growth."

 

The GST rate reduction benefited all FMCG companies, though in varying degrees. While some saw a 40?nevolent impact on their portfolios, it was as high as 85% for some companies that are especially focused on rural sales.

 

"GST rate reduction has definitely improved the buyer sentiment and a strong monsoon has uplifted rural demand," said a senior official from a leading personal care products company focused on rural sales. "But the benefits of the GST rate cut, especially in urban areas, will be felt in the coming quarters."

 

Even if overall revenue growth for the FMCG sector does not rise in tandem with the volume growth, it may still show strong potential for future growth, officials believe. "It needs to be remembered that in the last financial year, the revenue growth was exceptionally strong, which created a high base," said the personal care company official. "This year, if revenue growth remains flat or rises by 1-2% in Oct-Dec, it still signifies that the sector has been able to hold on to recovering consumer demand."

 

During the third quarter of FY25, growth in the FMCG sector came largely from a sequential recovery in rural markets, pent-up festival-season demand, and higher prices of products like edible oil and packaged flour.

 

"Sales growth of staples and foods categories has remained flat more or less in urban markets, but we have seen increased traction in personal care and winter care products, which is stronger than what we saw last year," a senior official at a key distribution company in West Bengal said. "Strong winter portfolio sales is definitely aiding the overall growth."

 

GST IMPACT RECOVERY 

Industry officials noted that the recovery in sales after the GST rate cut has been faster than expected in certain product categories, especially winter products like personal care, hot beverages, honey, chyawanprash and others. "The demand for winter care products at least in the east (India) is higher than previously perceived owing to the early onset of winter and the prevalent cold conditions in the region," said the official at the distribution agency. "This year, the winter has been harsher than last year, because of which demand for winter care products is high."

 

In August, just after Prime Minister Narendra Modi announced the government's intention of reducing GST rates by Diwali, sales channels of all FMCG companies started de-stocking inventory at a rapid pace and did not place fresh orders with manufacturers, waiting instead from prices to fall and the new prices to get printed on packs.

 

"There was a lot of confusion (at the time of GST rate cut) as consumers questioned retailers about price reduction for every single pack and distributors were unsure about the billing to retailers, amongst other issues. Now these have been sorted and sales momentum is back on track," the official with the distribution agency said. 

 

In September, industry leaders such as Hindustan Unilever Ltd. had indicated that the recovery in sales channels after the GST rate cut would take at least a quarter to settle.  End

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.