DEPARTMENT OF INDUSTRIES AND COMMERCE,
GOVERNMENT OF TELANGANA
Industry outlook, Opportunity in Telangana
Fast-moving consumer goods (FMCG) sector is India’s fourth largest sector with household and personal care accounting for 50 per cent of FMCG sales in India. Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55 per cent) is the largest contributor to the overall revenue generated by the FMCG sector in India. However, in the last few years, the FMCG market has grown at a faster pace in rural India compared to urban India. Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50 per cent of the total rural spending.
The Government has allowed 100 per cent Foreign Direct Investment (FDI) in food processing and single-brand retail and 51 per cent in multi-brand retail. This would bolster employment, supply chain and high visibility for FMCG brands across organised retail markets thereby bolstering consumer spending and encouraging more product launches. The sector witnessed healthy FDI inflow of US$ 16.28 billion during April 2000-March 2020.
Some of the major initiatives taken by the Government of India to promote the FMCG sector in India are as follows:
- The Government of India has approved 100 per cent FDI in the cash and carry segment and in single-brand retail along with 51 per cent FDI in multi-brand retail.
- The Government has drafted a new Consumer Protection Bill with special emphasis on setting up an extensive mechanism to ensure simple, speedy, accessible, affordable and timely delivery of justice to consumers.
- The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG products such as soap, toothpaste and hair oil now come under the 18 per cent tax bracket against the previous rate of 23-24 per cent. Also, GST on food products and hygiene products have been reduced to 0-5 per cent and 12-18 per cent respectively.
- GST is expected to transform logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing.
Other Enabling Factors
The growth rates of the Fast Moving Consumer Goods and Domestic Appliances sector has been phenomenal, even when the country’s economy was slow. Telangana is centrally located in India and for the FMCG and Domestic appliances sectors, transportation costs are very critical. It is important to capitalize on the locational advantage of the State, especially for this sector.
Meet or Beat Policy:
Government of Telangana is taking all the necessary steps to make Telangana the best investment destination in India and across the world. “Meet or Beat” Policy is one of the proactive steps taken to achieve the same. As part of the policy, Telangana government is ready to offer opportunities that will either match or supersede any package offered anywhere in the world for industries.
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