FMCG sector in India, Market opportunities & Investments

Overview of FMCG Market in India

The overall FMCG market in India is expected to grow at a CAGR of 13.6 percent to touch USD 108.3 billion during 2010-2020.

The FMCG market in India has grown at a CAGR of 12.4 percent to USD 54.3 million. The growth was majorly contributed by the inflating income levels, changing lifestyle, rising disposable income, rapid urbanization, the emergence of the e-commerce and modern retail sectors of the country.

Major market segments in the Indian FMCG sector are food & beverages, household & personal care and healthcare.

Household & personal accounting for 50 percent of the overall market, followed by healthcare (32 percent) and food & beverage (18 percent).

In the presence of several growth drivers, we also believe that the market is currently challenged by factors such as increasing tax rates on FMCG products, absence of proper storage & logistics capabilities, higher distribution margins which in turn increases the retail prices of the products and others.

Market Players in India

Investments

Abu Dhabi-based Lulu Group plans to invest USD 370.6 million in a fruit and vegetable processing unit, an integrated meat processing unit, and a modern shopping mall in Hyderabad, Telangana
Walmart India plans to add 50 more cash-and-carry stores in India by 2020
Pepsi will set up one more unit in Maharashtra to make mango and pomegranate juices, and also an orange-based citrus juice. The investment is estimated at around USD 75.08 million
Direct selling firm Amway has set up its first manufacturing facility in India at an investment of USD 82.61 Million, in Tamil Nadu. India is only the fourth country in the world where it has invested in a plant

Government Measures – Ease of doing business in India

100 percent FDI is allowed in food processing and single-brand retail and 51 percent in multi-brand retail
Implementation of the Goods and Services Tax (GST), which aims to replace a multitude of indirect taxes with a single GST rate, is expected to benefit the sector enormously by reducing the overall incidence of taxation
The Government announced setting up of special fund of USD 300.47 Million in the financial year 2014-15 in NABARD for extending affordable credit to designated food parks and the individual processing units in the designated food parks at concessional rates. The fund has been continued in 2015-16

About Sannam S4

Sannam S4 is a global market-entry services firm that has supported the successful entry and expansion of over 250 companies and organizations into the Indian market alone. We currently deliver in 21 international markets- Australia, Brazil, Canada, China, Colombia, Eastern Europe, France, Germany, Hong Kong, India, Indonesia, Italy, Malaysia, Mexico, Russia, UAE, Singapore, Thailand, U.K., USA, and Vietnam. In all of these markets, our local teams offer a comprehensive range of services including market feasibility, due diligence, accounting, tax, cross-border banking, HR & corporate compliance, recruitment and more, all backed by deep practical in-market experience and expertise. Our unique approach mitigates the costs and risks associated with managing a multitude of service providers.

If you would like to understand more about market opportunities in India for your company in the retail sector, you may contact us to arrange an appointment or telephone call via connect@sannams4.com.

In this edition of our newsletter, we have given an overview of the Indian market, recent investments made in the sector, opportunities and future prospects and government measures to ease of doing business in India.

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