FMCG Sector Optimistic Ahead of Budget 2026, Urges Further Tax Cuts and Supportive Policies

New Delhi: With just two days to go for the presentation of Budget 2026, India’s fast-moving consumer goods (FMCG) sector is gearing up with high expectations. Industry leaders are urging Finance Minister Nirmala Sitharaman to implement further tax relief measures and policies that can boost consumption and stabilize costs for domestic producers.

Relief from Price Volatility
FMCG companies are seeking budget provisions that can shield domestic players from fluctuations in raw material costs and provide a stable operating environment. Industry representatives also hope for measures that will expand global market access for Indian products.

Boosting Rural Consumption
Mayank Shah, Vice President of Parle Products, highlighted that FMCG sales are increasingly driven by rural and small-town markets, where price sensitivity is high. He suggested that the government focus on policies to enhance purchasing power in these regions, as well as budget allocations that stabilize agricultural input costs, allowing FMCG companies to manage production costs without burdening consumers.

Tax Cuts on Key Products
Sudhir Sitapati, MD & CEO of Godrej Consumer Products, noted that some essential FMCG products, including home care items, are still taxed at 18% GST. He recommended reducing the rate to 5% to stimulate demand.

Encouraging Global Competitiveness
Rajiv Kumar, Vice Chairman of DS Group, expressed gratitude for recent strategic tax reliefs, which have improved consumer demand and strengthened recovery. He urged the government to continue focusing on a consumption-driven framework that enhances affordability and market access, and to provide targeted manufacturing incentives to strengthen the ‘Make in India’ mission. These measures could include capital subsidies, concessional land rates, and input tax credits to boost rural production and consumption while helping Indian FMCG companies expand globally.

Early Signs of Recovery
Since GST rate reductions on several FMCG products in September 2025, early signs of sector recovery have emerged. Dabur reported improved demand in its quarterly investor update, noting that distributors and retailers prioritized clearing high-cost stocks in October 2025, leading to stronger consumer sentiment across urban and rural markets. According to Bizom, orders at neighborhood stores rose by 6.9% in the December quarter, more than double the 3.1% increase a year earlier. Marico also reported positive volume growth and expressed cautious optimism for continued gradual improvement in consumption in upcoming quarters.

FMCG leaders hope that Budget 2026 will reinforce these gains, providing stability, tax relief, and policies that support both domestic production and global competitiveness.