According to CRISIL Ratings, India's organised fast-moving consumer goods sector is expected to record 8%-10% revenue growth in fiscal 2027, compared with approximately 8% growth in the previous fiscal year. As reported by CRISIL Ratings, this projected growth will be driven largely by price increases rather than higher sales volumes, as companies implement selective price hikes to offset rising input costs. The growth will be aided by players beginning to pass on the impact of crude-linked inputs including packaging materials, which are emanating from the West Asia conflict. While there will be a sharp 6-7% increase in realisations as players partially pass on the increase in prices of crude-linked inputs, volume growth is likely to moderate to 2-3% this fiscal year amidst inflationary pressures.
Volume growth is expected to slow sharply to 2%-3% this fiscal year from 5%-6% a year earlier, as inflationary pressures hurt consumer spending in both urban and rural markets. According to CRISIL Ratings, household budgets will face inflationary headwinds as average crude oil prices for this fiscal are projected at 30-35% higher year-on-year. The agency warns that rural demand, which had outperformed urban markets over the past two years, could see a reversal of fortunes this fiscal, given the forecast of a below-normal monsoon. However, continuing benefits of the goods and services tax rationalisation undertaken in September 2025, along with increased allocation to welfare schemes, will provide some demand support for the sector.
Companies making soaps, detergents, shampoos and hair oils are expected to face steeper cost pressures as crude-linked inputs make up 30%-40% of their raw material costs, compared with around 15% for food and beverage makers. As reported by CRISIL Ratings, the food and beverages segment contributes nearly half of industry revenue, while personal care and home care account for about a quarter each. The report is based on a study of 74 FMCG companies accounting for about one-third of the sector's estimated ₹6.6 lakh crore revenue in fiscal 2026. Cost pressures are not uniform across segments, with personal care and home care categories facing sharper increases in input prices compared to F&B.
CRISIL estimates operating margins for rated FMCG firms will decline by 150-200 basis points this fiscal year from around 19% last year, even as companies try to offset rising costs through selective price hikes, lower advertising spending and supply-chain efficiencies. According to Aditya Jhaver, director at CRISIL Ratings, gross margins of organised FMCG players will decline 300-350 basis points due to the rise in input costs, as pass-through of cost inflation will be partial amid competitive pressures and the risk of downtrading. However, companies are calibrating their advertising spends, focusing on cost efficiencies and negotiating with suppliers and distributors across the value chain. This is expected to limit the impact on operating profitability to 150-200 basis points, keeping operating margins relatively healthy at 17-18%.
Despite margin pressures, CRISIL Ratings said credit profiles of FMCG companies would remain stable due to strong cash generation, low leverage and healthy liquidity. The agency identified key risks to the sector including prolonged high crude oil prices, weak domestic consumption and uncertainty surrounding the monsoon season. Companies are likely to raise prices to offset higher costs of crude-linked inputs such as packaging materials, amid supply disruptions and elevated oil prices stemming from tensions in West Asia. The estimates are based on a study of 74 FMCG companies accounting for about one-third of the sector's estimated ₹6.6 lakh crore revenue in fiscal 2026.
