Key Takeaways
FMCG growth depends heavily on consumption and disposable income
Budget 2026 can revive urban demand while sustaining rural momentum
Manufacturing incentives and GST relief are critical for affordability
Indian FMCG brands need policy support to expand globally
Stable policy can deliver steady growth and better margins in 2026
Budget 2026 Expectations: Why FMCG Needs a Consumption-Led Push
As India prepares for Union Budget 2026, one sector that quietly reflects the country’s economic health is FMCG (Fast Moving Consumer Goods). From daily food items to hygiene products, FMCG spending tells us how confident consumers really feel. When people buy more soap, snacks, toothpaste, and packaged foods, it signals optimism. When they cut back, it points to stress.
This is why comments from industry leaders matter. Recently, Rajiv Kumar, Vice Chairman of DS Group, highlighted the need for continued government support for the FMCG sector in Budget 2026. His message is clear and practical: consumption must stay strong if India wants steady economic growth.
Having tracked India’s FMCG journey for over two decades, I can say this with confidence no sector reflects ground-level reality better than FMCG.
Why FMCG Matters to India’s Economy
FMCG is not a glamorous sector like technology or capital goods, but it is one of the most important. It directly touches every Indian household, across income levels and geographies. The sector employs millions, supports farmers, small manufacturers, transporters, retailers, and contributes significantly to GST collections.
When FMCG grows, rural and urban India grow together. When it slows, stress appears almost immediately in the economy.
In recent quarters, FMCG growth has been uneven. Rural demand has shown improvement, helped by better farm incomes and government schemes. Urban demand, however, has remained under pressure due to inflation and higher living costs. Budget 2026 therefore becomes crucial in restoring balance.
Rajiv Kumar’s Perspective: Experience Speaking
With more than 40 years of experience in FMCG, Rajiv Kumar’s views carry weight. Under his leadership, DS Group has transformed itself from a tobacco-focused business into a diversified FMCG powerhouse. Today, food and beverages and mouth fresheners contribute the bulk of its revenue, supported by a distribution network reaching nearly 50 lakh outlets.
In FY25, DS Group crossed ₹10,000 crore in revenue and has set its sights on ₹20,000 crore by 2029. This ambition is closely linked to consumer spending power and supportive policy.
Kumar believes that the recovery seen after recent tax relief measures should be strengthened further. In his view, Budget 2026 should continue focusing on consumption, affordability, and manufacturing support to keep FMCG growth on track.
Learning from Budget 2025–26
The previous budget provided meaningful income tax relief, including higher exemption limits and slab rationalisation. This put more money in the hands of consumers. The result was visible: FMCG value growth touched nearly 14%, with volume growth close to 6% in early FY26.
This clearly shows that when people have more disposable income, they spend more on everyday products. FMCG benefits first, followed by other sectors.
Budget 2026 has the opportunity to build on this momentum rather than dilute it.
Consumption Is the Real Growth Engine
At its core, FMCG growth depends on one simple factor—how much people can afford to spend. Kumar’s call for a consumption-driven policy framework is both logical and necessary.
Tax relief, higher standard deductions, and rationalised income slabs directly increase take-home pay. This supports demand across food, personal care, and household products. Importantly, it helps both rural and urban consumers.
In a country where nearly 60% of GDP is driven by consumption, ignoring this reality would be a policy mistake.
Manufacturing Support and Make in India
Beyond consumption, Rajiv Kumar also stresses the importance of manufacturing incentives under the “Make in India” framework. FMCG manufacturing is capital intensive and highly competitive. Margins are thin, and cost efficiency decides success.
Budget 2026 expectations from the sector include:
Capital subsidies for setting up plants
Concessional land rates, especially in rural areas
Input Tax Credit relief to reduce working capital stress
These measures can encourage companies to manufacture closer to consumption centres, reduce logistics costs, and generate rural employment.
GST Rationalisation: A Long-Pending Need
GST has simplified India’s indirect tax structure, but FMCG companies still face challenges. Different tax rates on essential items like health, hygiene, and nutrition products impact affordability.
Industry leaders, including Kumar, have repeatedly asked for rationalisation of GST on essential FMCG categories. Lower taxes on mass-consumption products can directly boost volumes without hurting long-term tax collections, as higher volumes often compensate for lower rates.
Budget 2026 could use GST reform as a tool to fight inflation and support demand at the same time.
Supporting Rural Supply Chains
Rural India is showing signs of resilience, but supply chains need strengthening. FMCG companies depend heavily on agriculture, dairy, and allied sectors for raw materials.
Investment in farm productivity, cold storage, rural logistics, and dairy infrastructure can stabilise input costs and support farmer incomes. This creates a virtuous cycle higher rural income leads to higher FMCG consumption.
Such spending also has strong multiplier effects across the economy.
Technology and Efficiency in FMCG
Modern FMCG is no longer just about mass production. Automation, data analytics, AI-driven demand forecasting, and supply chain optimisation are becoming essential.
Kumar has highlighted the need for technology-focused incentives that allow companies to invest in automation and digital systems. Budget 2026 can encourage this through tax benefits and targeted schemes.
Higher efficiency means better margins, lower wastage, and more affordable products for consumers.
Helping Indian Brands Go Global
Indian FMCG brands are increasingly looking beyond domestic markets. From packaged foods to ayurvedic and herbal products, global demand for Indian offerings is rising.
However, global expansion requires support in the form of export infrastructure, trade agreements, and regulatory assistance. Budget 2026 can play a role by strengthening export ecosystems and helping Indian brands compete internationally.
This is especially important as companies like DS Group target ambitious revenue milestones in the coming years.
Outlook for FMCG in 2026
Industry estimates suggest high single-digit volume growth in 2026, supported by stable raw material prices and improving rural demand. Margin pressures are easing, and policy support could further strengthen profitability.
India’s young population, rising aspirations, and expanding middle class remain long-term positives for FMCG. But sustaining this growth requires consistent and sensible policymaking.
Final Thoughts
FMCG may not grab headlines like startups or stock markets, but it is the backbone of India’s consumption story. Voices like Rajiv Kumar’s remind policymakers that growth begins at the household level.
Budget 2026 has a real opportunity to strengthen this backbone through consumption support, manufacturing incentives, GST reform, and export facilitation. If done right, FMCG can continue to deliver steady growth, employment, and stability to India’s economy.
For investors, businesses, and policymakers alike, the message is simple: when FMCG thrives, India moves forward.
Disclaimer: This article is for educational and informational purposes only and should not be considered financial or investment advice.