Tax and GST cuts among govt steps boosting consumption, says ITC's Puri

ITC CMD Sanjiv Puri says government tax cuts and GST reductions are aiding consumption, as digitisation, rural demand and evolving GenZ and millennial preferences reshape FMCG growth

Reduction in income tax (I-T) rates and the goods and services tax (GST) cuts announced in September last year are among a slew of interventions taken by the government to aid consumption, Sanjiv Puri, chairman and managing director (CMD) at ITC, said in a fireside chat with Nivedita Mookerji at Business Standard’s annual event Manthan 2026.

 

During the conversation, Puri said that there have been several policy interventions by the government and reforms over a period of time, and this has made India the most resilient and the fastest-growing country in the world.

 

“To achieve these kinds of growth rates at a time when the whole world is going through a lot of challenges, it is indeed remarkable and a testament to the policy interventions. There have been a slew of interventions to aid consumption in the past. The honourable finance minister earlier announced reduction in income tax rates, and then the GST slashing came in. And together with that, the overall macros are also very supportive, because the investments in public infrastructure are continuing,” he said.

 

 

Puri added that digitisation is empowering the economy and fortunately, inflation is benign and investments in rural India are aiding growth for the country’s fast-moving consumer goods (FMCG) sector. The ITC CMD believes that since all the macros are in place, things will get better progressively.

 

He also said that India is a consumption-driven economy and the FMCG sector does correlate to the progress in the economy. However, Puri believes that the basket of consumption is also shifting and, therefore, the exact correlations will evolve over time.

 

Talking about the GenZ consumption patterns, which are emerging for the FMCG sector, he said the consumer accounts for 46 per cent of the spends because the strength of this cohort of the population stands at 400 million in India.

 

“He (GenZ) is more well-informed, more focused on purpose, has very specific requirements like clean labels, health, and even indulgence. And, he is redefining them,” he said.

 

ITC has also launched chocolates in kunafa flavour under its Fabelle brand, and also a host of pan-Asia flavoured food items to cater to the evolving taste of the GenZ.

 

Puri also said that there is a 250 million consumer base that sits above the 40 age bracket, and they have their own requirements. “They want nutrition, dense products for an active lifestyle. That's where the right shift comes in. They are the millennials and traditionalists who are now looking for some convenience at home,” he said.

 

Talking about channels of distribution increasing and evolving, Puri said the go-to-market routes are now changing from being largely general trade-led to having multiple channels that have come in with quick commerce (qcom) leading the growth.

 

Calling the landscape competitive, Puri explained: “Access to capital is not a problem in India. If you have a great idea, capital is available. There are now newer entrepreneurs coming and there are a lot more people coming in the new-age systems like D2C (direct-to-consumer). Along with that there are local, regional, and national-level MNCs, all of them competing.” 

 

He also said that for ITC it is important to remain nimble and consumer-centric.

 

“We have to be where the consumer is. We have to serve the consumer and what he needs. On one hand, we have to be an omni-channel player. On the other, our portfolio has to be contemporary and future-ready, and has to be refreshed and revitalised continuously, because there is a multi-dimensional evolution in the market. Different needs and cohorts are emerging,” he said.

 

Puri said ITC is revitalising its portfolio organically with its core brands, and is also complementing it inorganically as he referred to the company’s recent acquisitions, which include 24 Mantra, Prasuma, and Mother’s Sparsh.

 

He believes that investment in research and development (R&D) is core and that is not India’s strong point. But R&D has been at the core for ITC and it has deep investments, Puri said, adding that the company is seen as the largest investor and the largest innovator in the private sector after the establishment of its life sciences and technology centre.

 

“In today's world, it's not about innovation merely because you are a challenger. You need a lot more innovation because there are many channels, many more cohorts emerging, and you need them fast. You need to take bets, create, and invest in digital. It is a very positive outcome of the Honorable Prime Minister's visionary digital India policies,” Puri said and explained that India has a huge digital infrastructure, and with a critical piece of consumers engaged, AI tools emerging, it has become core to competitiveness.

 

Talking about ITC’s FMCG business, he said it is one segment the company is deeply committed to and is investing heavily in the space.

 

Puri said the FMCG business turnover last year was around ₹22,000 crore, and the run rate currently is around ₹24,000 crore. ITC wants to scale it up further as it has outlined its next topline target of ₹50,000 crore over the medium term.

 

“We want leadership not just in terms of size of market standing, but product leadership. A bulk of what we are doing is food-related, we want to see all our food brands anchor agri value chains, empower farmers to create a lot of value in the rural economy… We started our journey in export some years back, positioning our products in various markets. We would like that also to multiply over a period of time on this growth path,” he said.

 

Talking about consumption growing in rural India compared to urban, Puri explained that rural should naturally be growing faster than urban, because of the opportunity.

 

“That's a relatively underserved market as compared to urban India. That's where incomes have to move faster, and I expect that will continue to grow faster. Of course, that does not mean urban should not grow. Urban also should be growing, but I do expect rural should stay ahead of the urban. That's actually a healthy sign of India's economic progress,” Puri said.