FMCG growth slows in September quarter as GST changes disrupt volumes

New Delhi: India’s fast-moving consumer goods (FMCG) sector recorded slower growth in the July–September period, with volume expanding by 5.4% amid disruptions linked to the Goods and Services Tax (GST) rate changes, according to the latest NielsenIQ report. Value growth rose to 12.9 % during the quarter.

The report noted that rural markets continued to grow faster than urban regions for the seventh straight quarter, despite easing from 8.4% to 7.7% year-on-year.

“The market recorded a 5.4% rise in volume alongside a 7.1% increase in prices, with unit growth outpacing overall volume growth, signalling a stronger consumer preference for smaller packs,” it said.

Urban areas, which account for the bulk of FMCG demand, showed only moderate recovery, particularly in smaller towns. Sequentially, growth slowed. Rural demand, driven largely by affordability and smaller pack sizes, contributed around 38 % of overall FMCG consumption.

“Rural India has recorded a 7.7% increase compared to 3.7% in urban areas, outpacing urban regions in volume growth for the seventh consecutive quarter. However, the gap is narrowing as urban areas show signs of sequential recovery,” the report said, adding that “this recuperation is primarily driven by smaller urban towns.”

Rural markets had earlier posted 8.3% growth in the March quarter and 8.4 % in the September quarter of 2025.

Metropolitan regions continued to report a decline in offline sales due to a shift towards e-commerce, though modern trade registered signs of revival.

“The Indian FMCG sector continues to demonstrate resilience, with rural markets leading the charge for the seventh consecutive quarter. While urban recovery is gaining traction, particularly in smaller towns, rural demand remains the cornerstone of volume expansion. E-commerce continues to be a key growth engine, especially in the top eight metros,” said Sharang Pant, Head of Customer Success, FMCG, NielsenIQ in India.

E-commerce’s share in FMCG sales increased by 1% across the eight major metros.
“Q3 ’25 (September quarter) omni-channel volume growth remains driven by e-commerce, with modern trade also contributing this quarter. However, a marginal softening in e-commerce volume growth is observed in Q3 ’25,” the report noted.

With inflation easing, consumption outlook remains positive, although the report suggests that the impact of GST rate changes is likely to reflect in the next two quarters.

The shift to GST 2.0 slowed growth in the home and personal care (HPC) segment, which includes personal hygiene products, lotions, soaps, shampoos, dental care, diapers and other household items.

“In Q3 2025, food consumption largely remained stable at 5.4%, driven by a balance in increased volumes in staples categories and a decline in volumes in impulse and habit-forming categories. Meanwhile, home and personal care slowed down in volumes with 5.5% consumption growth,” it said.

Over-the-counter categories recorded a strong 14.8% rise in value sales, supported by a 9.7% increase in prices.