FMCG brands pin their hopes on the Union Budget 2026 to boost consumption

India's FMCG sector enters 2026 with cautious optimism. Last year's sweeping GST cuts delivered a festive season windfall. The government's GST rationalisation in September 2025 proved to be a watershed moment for consumption. By collapsing tax slabs and moving nearly 99% of consumption items to lower brackets, the reform boosted affordability just as the festive season kicked in.

According todata, India's festive period between September 22 and October 21 saw consumer spending jump 8.5% year-on-year to Rs. 6,00,000 crore (US$ 67.6 billion). Retailers reported strong sales across household goods, jewellery, electronics, and apparel; a signal that the tax relief had reached the right nerve.

What stood out wasn't just the Diwali spike, but what came after. In a departure from typical years, when demand tapers after the festivities, brands reported sustained momentum. Reports suggest that aggregate demand in the four weeks after Diwali rose 10-20% year-on-year across the consumer goods and jewellery sectors. The wedding season, bolstered by higher disposable incomes and an early onset of winter, keeps the cash registers ringing. Even packaged goods saw a lift. The report noted that November demand outpaced October, with large packs of edible oil, basmati rice, and sugar moving faster as trade refilled pipelines.

Online shopping mirrored the offline surge. ACriteo report found that 93% of Indian consumers shopped online during the festive season, with sales growing 14% year on year in the two weeks before Diwali. The broader FMCG sector responded in kind.NielsenIQ's Q3'25 snapshot reported that the industry achieved 12.9% value growth versus the same period in 2024, with rural markets growing faster than urban areas for the seventh consecutive quarter. Rural India recorded a 7.7% volume increase compared to 3.7% in urban regions, reinforcing the sector's dependence on the hinterland.

But sustaining that momentum will require more than consumer enthusiasm; it will need structural policy support. As brands prepare for the Union Budget, the question is whether the government can build on it.

Brands want Budget 2026 to go beyond short-term relief

With early recovery signals flashing, FMCG brands are now looking to Budget 2026 to cement the gains. The industry's wish list is less about one-off sops and more about creating structural enablers that improve affordability and market access over the long term.

"While early indicators point to a gradual improvement in consumption sentiment, especially in urban markets, sustaining momentum across rural and non-metro India will remain important for broad-based growth," says Poulomi Roy, CMO, RSH Global. "From an FMCG perspective, Budget 2026 presents an opportunity to further strengthen household purchasing power through calibrated support on essentials and consumption-linked measures."

Roy emphasises that any step that improves affordability and predictability would help brands plan pricing, communication, and media investments with greater confidence and long-term brand-building. The challenge isn't just about boosting demand in the short run but about giving brands the clarity to invest in infrastructure, innovation, and media without second-guessing every quarter.

Rajeev Kumar, Vice Chairman of DS Group, highlights the need for manufacturing support tied to the ‘Make in India’ mission. “It will be helpful if the upcoming Union Budget continues to focus on a consumption-driven framework that strengthens affordability and market access. This can be achieved by facilitating measures such as capital subsidies and land at concessional rates to bolster rural production and consumption, alongside providing critical tax relief through Input Tax Credits.”

His focus is on making manufacturing more viable in rural areas, which would in turn support local consumption and employment.

Bimalendu Tarafdar, Vice President of Group Marketing at Sanjay Ghodawat Group, a company with brands such as Star Oil, Coolberg, To Be Honest (TBH), and more, zeroes in on a specific intervention to reshape brand strategies. He points to the 40% GST on non-alcoholic beverages and calls for a review of rates on healthy snacks. 

"This would immediately improve affordability, especially in rural markets where recovery is still underway, and allow brands to pass on the benefits to consumers while investing more confidently in demand generation and awareness-building efforts."

Tarafdar also urges, “We strongly urge the government to sustain and amplify consumption by continuing to emphasise direct support for farm incomes, strengthening agri-value chains, food processing infrastructure, and renewed incentives for domestic oilseed cultivation, such as mustard and soybean, in line with the government’s Aatmanirbhar Bharat vision.”

For dairy-focused brands, the priorities are slightly different but equally structural. Akshali Shah, Executive Director at Parag Milk Foods, comments, "From a brand perspective, the single most impactful Budget 2026 intervention would be further strengthening agri and dairy value chains from farm productivity and milk collection to cold-chain and processing infrastructure," she says. This approach, Shah explains, would ease cost pressures at the supply level, giving brands greater flexibility in pricing and enabling sustained media investments rather than short-term tactical corrections.

These demands reflect a sector that has moved past short-term gains and now seeks policies that support long-term planning. Whether it's lower GST on specific categories, manufacturing incentives, or infrastructure investment, the underlying ask is the same: make consumption growth predictable enough to justify the investments that drive it.

E-com and Q-com become the new growth engines

While traditional retail remains the backbone of FMCG distribution, e-commerce and quick commerce have emerged as critical for acceleration. The shift has been about reach, speed, and data-driven personalisation that brick-and-mortar channels struggle to match.

India's e-commerce market is forecast to grow 12.5% in 2025, reaching Rs. 17.7 lakh crore (US$ 211.6 billion), according toGlobalData. The sector is projected to grow at a compound annual rate of 11.5% between 2025 and 2029, reaching Rs. 27.3 lakh crore (US$ 326.7 billion) by 2029. Driving this growth are broader digital adoption, rising smartphone penetration, and the increasing trust in digital payments. The government's GST rate cuts have further supported discretionary spending on e-commerce platforms, with players like Reliance Retail, Amazon, and Flipkart participating in the 100-day "GST Bachat Utsav" campaign.

Quick commerce, in particular, is expanding. According toUniCommerce, the Indian quick commerce industry is projected to grow at a 67% CAGR between 2023 and 2028, reaching over $5.5 billion by 2025. The market is expected to generate US$ 5.38 billion in 2025, with a projected CAGR of 16.07% through 2029. User penetration is set to rise from 2.7% to 4.0% by 2029, with 60.6 million users expected by then. Urban millennials in Tier I and Tier II cities like Delhi, Mumbai, Bengaluru, Hyderabad, and Pune are leading the adoption curve.

The growth isn't confined to metros.Bain & Company reports that three in five new e-retail shoppers since 2020 have come from Tier-III cities or smaller, unlocking access for consumers in remote, brand-starved areas. The seller base is also diversifying, with 60% of new sellers since 2021 coming from Tier-II or smaller cities. High-frequency categories such as grocery, lifestyle, and general merchandise are set to drive e-retail growth, accounting for two out of every three dollars spent by 2030.

Shah believes budget-led support could accelerate this expansion further. "As e-commerce and quick commerce become increasingly important growth channels, budget-led support for logistics infrastructure, warehousing, and last-mile connectivity, especially in Tier-II and Tier-III towns, can significantly improve reach and access, while making these channels more efficient and scalable," she says.

Roy adds that in several Tier-II and Tier-III markets, improved access and availability can accelerate adoption just as meaningfully as aspiration-led messaging. "Continued emphasis on rural income stability, last-mile access, and digital infrastructure can create a more resilient foundation for demand," she notes.

E-commerce and quick commerce are reshaping how FMCG brands think about distribution, pricing, and customer engagement. For Budget 2026 to support this shift, it needs to prioritise infrastructure that makes these channels viable beyond the metros.

If the budget falls short, brands have a Plan B

Despite the optimism, there's a pragmatic undertone to the industry's outlook. If Budget 2026 fails to deliver meaningful consumption support, brands won't sit idle; they'll pivot to more defensive strategies.

Tarafdar is blunt with his response. "If Budget 2026 falls short of materially boosting consumption, FMCG brands will likely double down on value-driven communication, disruptive innovation, and sharper performance marketing to protect growth," he says. However, he cautions that stable, growth-oriented fiscal measures and policy reforms remain the most effective path to unlocking the full potential of India's FMCG sector and driving sustainable, inclusive growth.

Shah echoes this sentiment, noting that if consumption growth remains measured, brands will continue to adapt through sharper value positioning, faster innovation cycles, and more performance-led marketing. She believes that sustainable growth ultimately depends on a stable and supportive consumption environment built through consistent policy support, rather than reactive shifts in communication alone.

The subtext is telling. Brands can navigate a tepid consumption environment by focusing on smaller pack sizes, leaning into e-commerce, or ramping up performance marketing, but these are short-term fixes. 

Last year's GST cuts proved that well-timed tax reforms can unlock consumption across categories and geographies. But one good festive season doesn't make a trend. For brands to confidently invest in capacity, innovation, and market expansion, they need policy continuity and structural support that goes beyond the next quarter.