Cheaper Inputs Set Stage for FMCG Volume Growth

Lower prices of grains, cut in oil import duties allow firms to pass on benefits

- Suneera Tandon

A surge in sales may be around the corner for some of India's leading packaged consumer goods makers, as cheaper inputs and lower import duties craft a perfect recipe for their next stage of growth.

Companies and analysts alike said that falling prices of wheat, maize, barley and oils will help expand volumes, in a change from the recent experience of pricier products driving revenue.

On 31 May, the government halved the basic customs duty on crude soybean oil, crude palm oil, and crude sunflower oil to 10%, eight months after raising it from nil to 20%. The move had prompted packaged goods makers to hike prices of items like soaps and biscuits to protect their margins. Crude palm oil and its derivatives are widely used across packaged foods, including cookies, cakes, chips, detergents, and soaps.