Day 48 – Q 1. Comment upon the evolving trends in the FMCG sector in India. Does this sector need a better regulatory regime? Examine.
1. Comment upon the evolving trends in the FMCG sector in India. Does this sector need a better regulatory regime? Examine.
भारत में एफएमसीजी क्षेत्र में विकसित रुझानों पर टिप्पणी। क्या इस क्षेत्र को एक बेहतर नियामक व्यवस्था की आवश्यकता है? जांच करें।
Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold quickly and at a relatively low cost. Examples include non-durable goods such as packaged foods, beverages, toiletries, over-the-counter drugs and medicines, and other consumables.
FMCG in Agricultural products:
- Various food products and beverages drive their raw material from agricultural produce, such as bread packets, Maggie and cornflakes, wafers, various sauces, etc.
- These are very rapidly increasing in India.
FMCG sector in India
- Fast moving consumer goods (FMCG) are the 4th largest sector in the Indian economy.
- Out of three main segments of FMCG sector i.e. healthcare, household and personal care, and food and beverages, last one accounts for 19% of the sector.
- Considering the size of agriculture sector in India, there is huge unexplored potential for FMCG in agriculture sector.
- India’s contribution to global consumption is expected to get double to 5.8 % by 2020 due various factors such as increasing disposable income, higher demand especially rural areas, etc.
Potential for Agricultural FMCG in India:
- 100% FDI is permitted in single brand retail, domestic and international companies in FMCG. It is great opportunity to explore innovative production and processing such as paper pulp, sugar products, fermentation, food processing (dried fruits and vegetables, jams and sauces), vegetable oils and vanaspathi, soaps, cosmetics and toiletries industries, etc.
- About 50% of India’s workforce is employed in agriculture sector. There is huge manpower available to harness processing potential of agriculture.
Issues in FMCG sector in India:
- One of the major issues is lax regulation. There is huge potential for food processing in every household, especially of rural India. But lack of awareness, lack of scientific preservation techniques, and absence of feedback or recall mechanism hampers the growth of this potential on large scale.
- Due to above shortcomings the huge global market remains unexplored.
- Indian food products, due to their spicy tastes, are in high demand overseas. But domestically this sector remains unconsolidated and unregulated.
- Other issues include adulteration and poor packaging, etc.
Need of regulatory regime in FMCG
- Though FSSAI is regulating and monitoring food products, but there are still large number of unique homemade snacks and wafers which if brought under regulatory ambit, will contribute more to household income as well as revenue to country.
- FMCG, especially in agricultural produce, forms part of small and medium scale industry. The MSMEs are one of the largest employers in India.
- Proper regulation of the sector will help MSMEs to grow and ultimately prosperity of households will be achieved.
- Self Help groups are another important group in food processing, regulatory regime is most needed to these groups.
- Environmental concerns and health concerns due to cheap packaging or adulteration etc are also demanding proper regulation of FMCGs.
- Food continues to be one of the most underpenetrated segment for organised FMCG players and the food industry in particular, and is likely to be benefited as Agricultural Produce Market Committee (APMC) reforms continue, and food safety regulations are secularly implemented.
Considering the rapidly growing domestic and global consumer market, there is huge potential for India to target doubling of farmers’ income by 2022 with the help of FMCGs. For it we need skill development, innovative environment and a strong regulatory regime.
Best Answer: Shri