PM's I-Day speech: GST relief, job push may serve up growth for FMCG firms

FMCG companies expect a consumption boost as PM Modi announces job creation scheme and GST reforms, which are set to ease financial burdens and stimulate demand, particularly in urban markets

Fast-moving consumer goods (FMCG) companies may have got a further impetus as Prime Minister Narendra Modi, during his Independence Day speech, made announcements that could give yet another boost to consumption.

 

The announcements, made under Pradhan Mantri Viksit Bharat Rozgar Yojana, may lead to the creation of over 35 million jobs in two years.

 

The scheme will provide incentives of up to ₹15,000 in two instalments to newly-employed youth and up to 3,000 per month per new employee to employers for creation of new job opportunities.

 

Modi also announced GST reforms as a Diwali gift to lower the tax burden on the common man.

   

After the two announcements, consumer goods companies expect people to buy more, and this trend is expected to be seen in the urban middle-class consumer space.

 

“I think this is a bold move by the government as some reductions, if done on daily essential items, will push urban middle class consumption higher,” Anghsu Mallick, managing director (MD) and chief executive office (CEO) at AWL Agri Business (formerly known as Adani Wilmar) told Business Standard.

 

He said that packaged items see higher demand in urban India than rural, thus the relief will be seen more in urban India.

 

 

 Parle Products which sells biscuits like Parle-G, also sees consumption further growing with these announcements.  

“This year is going to be very critical, and I don’t see any reason why companies will not do well,” said Mayank Shah, vice-president at Parle Products.

 

Shah said Parle had targeted high single-digit growth for FY26 in the months of April and May.

 

However, the announcements which have been made in the last few months, like the Reserve Bank of India (RBI) cutting interest rates, increasing the income tax rebate followed by good monsoon have already put more money in the hands of the consumer which has already boosted consumption.

 

“With these slew of measures coming in, we expect to close the year with a minimum of 12-15 per cent growth,” Shah said.

 

Dabur India also expects this move by the government to improve sentiments as we move into the festival season.

 

“As the festival season approaches, this move will help improve sentiment and put more purchasing power directly into the hands of millions of Indian families. It’s a signal of the confidence in India’s consumption story. It will energise demand, especially in rural and semi-urban markets, ease the burden on households and catalyse growth for branded FMCG products,” said Mohit Malhotra, CEO of Dabur India.

 

Amul also expects the reduction in GST rates to benefit both the producer and consumer. “We have been requesting the government to reconsider the current GST rates and once they are lowered, it will help bring prices down and stimulate demand,” Jayen Mehta, MD at Amul said.

 

He added that supporting the youth with jobs will also encourage them and that’s when it will support consumption. More importantly, it would motivate them as well.