The next time you reach for a bottle of shampoo or a bar of soap, you will notice the price has quietly crept up or the pack size has reduced. Across India’s organised fast-moving consumer goods sector, companies are raising prices.
According to a Crisil report, the revenue of FMCG companies is expected to grow 8–10% this fiscal year, a marginal improvement over the roughly 8% posted in fiscal 2026.
Crisil Ratings, which studied 74 FMCG companies accounting for about a third of the sector’s estimated Rs 6.6 lakh crore in revenue last fiscal.
Prices are doing the heavy lifting
Realisations are projected to rise 6–7% this year, as companies pass on the burden of costlier crude-linked inputs. Packaging materials, surfactants, and other petrochemical derivatives have all become more expensive in the wake of the ongoing West Asia conflict, which has pushed crude oil prices to an expected average of $90–95 per barrel for fiscal 2027, roughly 30–35% higher than last year, as per the report.
Volume growth, meanwhile, is expected to slip to 2–3% this fiscal from 5–6% in fiscal 2026.
Margins under pressure
The cost squeeze is expected to shave 150–200 basis points off the EBITDA margins of Crisil-rated FMCG companies, bringing them down from approximately 19% in fiscal 2026 to somewhere in the 17–18% range. Gross margins are expected to take an even sharper hit, down 300–350 basis points, but companies are partly compensating by trimming advertising budgets, tightening operational costs, and renegotiating terms with suppliers and distributors.
The impact is not uniform across the sector. Personal care and home care, like soaps, detergents, shampoos, and hair oils, are facing a sharper squeeze because crude-linked inputs make up 30–40% of their raw material basket. For food and beverages, that proportion is closer to 15%, giving those companies somewhat more breathing room.
Packaging costs alone account for 25–30% of total raw material expenses across the sector, making them a significant pressure point regardless of category, the report added.
Rural demand loses its edge
Over the past two years, rural India has been the relative bright spot for FMCG companies, outpacing urban demand and giving the sector a cushion against sluggishness in cities.
The India Meteorological Department has forecast a below-normal southwest monsoon this year at 92% of the average rainfall. A weak monsoon typically weighs on agricultural incomes and rural spending, as per the report.
Crisil further noted that urban demand is not immune either. Higher fuel prices and a broader inflationary environment, Crisil Intelligence expects consumer price inflation to rise around 300 basis points to 5.1% this fiscal, which will put pressure on household budgets across income levels.
The GST rationalisation carried out in September 2025 has moved 50–60% of the FMCG product portfolio to the lower 5% tax slab, a structural tailwind for consumption. Government welfare schemes, including PM-Kisan transfers and the Viksit Bharat rural employment initiative, will also provide some income support at the bottom of the pyramid, the report said.
Credit profiles stay intact
Despite the earnings pressure, the financial standing of FMCG companies is not expected to deteriorate. Low leverage, healthy cash generation, and strong liquidity positions mean the sector enters this difficult period from a position of reasonable strength. Crisil expects the credit profiles of its rated companies to remain stable.