India's fast-moving consumer goods sector faces a significant growth slowdown after the Gulf conflict drove up costs for packaging, transportation, and fuel. Global research firm Worldpanel by Numerator cut its growth forecast for the Indian FMCG industry to 3% from 5% for calendar year 2026 if the conflict continues beyond June and monsoon rains remain weak, according to data shared with The Economic Times. Managing director K Ramakrishnan at Worldpanel said the firm expects 5% growth if current macroeconomic conditions hold, but warned that deteriorating conditions and weaker-than-expected rainfall could force the downgrade.
The timing adds pressure to a sector that had just shown signs of recovery. FMCG sales volumes rose 5.4% in the March quarter from 3.5% a year earlier, marking the strongest quarterly volume growth in two years. But companies are already responding to cost pressures with price increases or pack shrinkage, both of which threaten volume gains.
Hindustan Unilever raised prices by 2 to 5% last quarter after seeing cost inflation of around 8 to 10% on its material base. Saugata Gupta, managing director at Marico, warned that inflation is the biggest threat to FMCG consumption, especially among lower-income and rural consumers who may cut back on discretionary purchases and switch to cheaper packs if the war drags on.
Urban markets have held up better than rural ones so far. Demand in cities remained stronger at 6.4% versus 4.3% a year ago, while rural growth rose to 4.4% from 2.7%. Food and beverages led growth with a rise to 5.5% from 3.3%, and household care climbed to 5.4% from 4.3%. Personal care, however, lagged at 3.4%, below the prior year's 3.9%, held back by weaker hair care demand. Tata Consumer Products chief executive Sunil D'Souza said companies across the industry would likely respond with price increases if crude oil costs continue to climb.