From Tax Reform to Consumption Revival: CII National FMCG Summit
FinTech BizNews Service
Mumbai, 15 December 2025: The Confederation of Indian Industry (CII) organised the 16th FMCG National Summit, where industry leaders examined how GST 2.0 can support the next phase of consumption recovery and long-term growth in India’s FMCG sector, with demand from rural and small-town India emerging as a key driver.
Delivering the welcome address, Sudhir Sitapati, Chairman, CII National Committee on FMCG and Managing Director & CEO, Godrej Consumer Products, said, “This is the 16th CII FMCG conference and the CII FMCG conference is discussing the impact of GST 2.0 on consumption. I think a lot of us feel that GST 2.0 can be a defining moment for the Indian FMCG industry. It has been a couple of years of pretty average growth and in 2017 with GST 1.0, we saw both an increase in consumption because of greater share of wallet and consumers having more disposable income, but also because a lot of players who don't pay taxes, it becomes a more level playing field and I think this is going to happen certainly in the categories where GST has been reduced, especially in foods categories, but also in general because there is more disposable income in the hands of consumers.” He highlighted that GST-led formalisation and higher disposable income could improve affordability and support consumption growth across categories, particularly food.
The opening session “GST 2.0 – Catalyst and Consumption Growth Ahead” focused on how GST 2.0 can influence affordability, penetration, and demand recovery across FMCG categories, especially in rural and small-town India. The session was moderated by Ravi Swarup, Partner and Consumer Products Practice Head, Bain & Company. Addressing the CII National FMCG Summit
Sudhanshu Vats, Co-Chairman, CII National Committee on FMCG and Managing Director, Pidilite Industries, stated, “The era of dividing the market into organised and unorganised is over. India today has hyperlocal, regional, national, and multinational players competing on a level playing field. The growth opportunity is significant, but it must be approached like a marathon, not a sprint. Success will depend on R&D and innovation tailored for India, as most global solutions do not work here directly. Companies also need to engage the full consumption pyramid across diverse geographies, cultures, and income segments, which is increasingly expanding rapidly.”
He added, “Recent GST reforms, along with tax measures announced in the Union Budget, are a major boost for the FMCG sector. They have created immediate headroom for discretionary spending and are expected to drive stronger demand, support premiumisation, and fuel long-term growth in consumption across small towns and rural India, where aspirations continue to rise.”
Saugata Gupta, Managing Director & CEO, Marico, stated, “The GST cut has delivered an immediate uplift to categories like durables and automobiles, where rates dropped sharply from 28% to 18%. For FMCG, the benefits will emerge over time. Over the long term, growth in the sector is anchored in affordability and availability, along with the steady shift from unbranded to branded consumption. Foods are likely to see the biggest long-term gain, given low packaged food penetration, a high growth runway, and rising demand for convenient, hygienically packed food. As the gap narrows on taxes and compliance costs for organised players, the opportunity in foods strengthens further. In personal care, where penetration is already high at the 5% rate, growth will be driven more by premiumisation and aspirational brands. While the FMCG impact may be gradual, growth should look stronger as the sector laps weaker quarters, with affordability remaining the core driver.”
Kumar Venkatasubramanian, CEO and Managing Director, P&G India, informed, “If you look at a category like diapers, the opportunity in India is enormous. In markets like the Philippines, consumption is about one diaper a day. In urban India, it’s one in two days, and in rural India, it’s one in two weeks. Even moving rural consumption closer to urban levels creates a massive penetration opportunity. GST has been a big enabler—rate changes have made entry packs more affordable, and we’re already seeing tailwinds from better pricing and seasonal factors. Beyond pricing, especially in urban India, the opportunity is also around innovation and premiumisation—getting mothers to use diapers every night and to upgrade to better products. Taken together, penetration, affordability and innovation give this category a growth runway for decades.”
Ravi Swarup said, “We are witnessing a strong early revival in FMCG consumption, not only in GST-reduced categories but across the board, supported by tax rationalisation, easing inflation, and rising consumer confidence. Growth will come from higher penetration, more frequent consumption, and ongoing premiumisation. FMCG brands, both incumbents and insurgents, must innovate continuously, ensure affordability, availability, and accessibility, and strengthen digital, AI, and talent capabilities to fully capture the vast opportunities in India’s dynamic and evolving market.”
The discussions at the summit highlighted that rural and small-town India, improved affordability, formalisation, and sustained innovation will be critical to unlocking the FMCG sector’s next growth phase, with GST 2.0 expected to play a central enabling role in India’s evolving consumption story.
