Budget 2026-27: Key challenges for retailers and consumer packaged goods

Retailers and CPG firms face weak consumption, rising compliance and real estate costs, GST working capital issues, and low innovation, seek FTAs, labour reforms, tourism push, Census, ONDC revival

Retailers and Consumer Packaged Goods 

Key challenges 

• Low /no growth in disposable income/private consumption  
• Stress in real estate due to increasing operations cost 
• Increase in compliance costs emanating from notification of digital privacy and new Labour Codes

• Inverted duty structure (on raw material versus finished goods) post GST revision leads to higher input tax credits against output tax liabilities. This is leading to working capital blocks 

• Limited spends on innovation in India-centric products limiting the total available market to top 30-40% of Indian households

  Industry ask 

• Create favourable environment for export-led growth by consummating FTAs with significant trading blocks 
• Rapid deployment of new Labour Codes & retail establishment activities  
• Boost tourism, both global and local, through high-quality marketing of India  
• Consummate Census in time to enable informed planning  
• Reinvigorate ONDC that helps create a platform for traditional retailers to participate in digital commerce 

  A PwC report