FMCG Sector to Clock Double – Digit Growth

Prelims level : Economy Mains level : Food processing and related industries in India- scope’ and significance, location, upstream and downstream requirements, supply chain management.
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In News:

  • According to the latest study by market research firm Nielsen, the FMCG industry is expected to grow between 11% and 12% in 2019, which is a tad lower than the 13.8% growth in 2018.

Explained:

  • Though, the growth is likely to be lower than that of the previous year, which saw the sector benefit from the overall health of the economy and lower inflation.  Incidentally, the FMCG industry growth in the fourth quarter of 2018 was quite buoyant at 15.9%
  • The growth in the current year will be primarily on the back of conducive macroeconomic environment, rural consumption and sustained benefits of GST regime and election impact, according to the study.
  • According to report, it suggests that the first half of the year (Jan.-Jun) will have decent double-digit growth, while industry growth in the second half will taper down to high single digits. Similar trends will be witnessed across the key super group of product categories viz Food, Personal Care & Home Care

FMCG:

  • Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy 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 with urban India.
  • Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50 per cent of total rural spending

Governments Efforts:

  • Number of mega food parks ready increased from 2 between 2008-14 to 13 between 2014-18.
  • Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-18.
  • The number of food labs increased from 31 during 2008-14 to 42 during 2014-18

Schemes:

  • SAMPADA
  • MEGA FOOD PARK SCHEME
  • AGRO PROCESSING CLUSTER SCHEME
  • INTEGRATED COLD CHAIN AND VALUE ADDITION INFRASTRUCTURE
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