Indian FMCG companies are pulling manufacturing and sourcing out of West Asia to protect margins and reduce geopolitical exposure. The shift reflects deepening supply chain strain across the sector, with raw material costs rising 8 to 10 percent according to Systematix Research, pushing firms toward smaller pack sizes and higher retail prices.
Rising Input Costs Drive Action
Raw material costs for FMCG firms have climbed 8 to 10 percent, putting margin pressure on producers. The price shock has already rippled into retail. Amul and Mother Dairy raised fresh milk prices by up to 2 rupees per litre, while petrol prices increased by up to 7.5 rupees per litre. The ripple effect threatens to add 0.42 percent to retail inflation in coming months.
Britannia Moves Export Production
Britannia has shifted manufacturing for West Asia and North American markets from Oman to its export-oriented facility at Mundra in Gujarat. CEO Rakshit Hargave told analysts the company took action to ensure supply channels do not depend on the Hormuz Strait, a critical chokepoint for regional shipping. Britannia's major manufacturing facilities are largely concentrated in Oman and Dubai.
Tata and Emami Diversify Suppliers
Emami faces deeper regional exposure. Half of the products the company sold in West Asia were manufactured within the UAE, with raw materials and packaging sourced from multiple global markets, 30 percent of supplies came from Europe, and the remaining 20 percent was exported from India. The company expects single digit year-on-year growth in the April-June quarter.
Dabur Spreads Risk
Dabur has moved part of production from the UAE to India, Egypt and Turkey, reducing dependence on its former regional hub. The company's regional supply chain was largely centred on Ras Al Khaimah in the UAE.