How big a role is the FMCG sector playing in India’s economic recovery? What are the impediments to this sector’s growth?

The Fast-Moving Consumer Goods (FMCG) sector deals with packaged goods that are consumed at regular intervals. It mainly includes household and personal care products, along with healthcare and food products.

Importance of FMCG Sector:

• The sector is a major contributor to the GDP growth of the country, fuelled by increasing demand and supply.
• It provides employment to approximately 3 million people.
• The sector is expected to grow at a double-digit rate.

Factors responsible for growth:

• Digital payments and e-commerce.
• Use of technologies like artificial intelligence and big data in predicting consumer behavior.
• Growth of online grocery stores.
• Impact of FDI in expanding the sector.
• Reduction of tax rate down to 5% by the GST Council on most of the processed food items, increasing the demand.
• Production linked incentive scheme to boost the manufacturing capacity.
• Rise in rural consumption and growth of rural market.

Impediments to growth:

• Impact of COVID-19.
• High inflation owing to domestic and international factors.
• Rising crude oil prices.
• Supply chain issues.
• Food wastage because of lack of cold storage infrastructure.

Way forward:

• Mitigating the effects of international factors.
• Reduction in logistics cost.
• Skill development of youth.
• Promotion of MSMEs and self help groups.