How GST-led FMCG volume rebound could reshape India’s AdEx in FY26

New Delhi: A pick-up in FMCG volumes and operating margins in the December quarter is setting up a more supportive backdrop for advertising spends in India, as large consumer companies signal demand recovery and better profitability after a phase of GST-related channel disruption and weak consumption.

FMCG remains the single biggest driver of media demand, and a key swing factor for overall AdEx.

When volumes improve and profitability stabilises, companies typically move from protecting margins to defending and growing market share. That is when marketing budgets stop shrinking and start getting rebuilt.

TAM AdEx data showed TV ad volumes fell 10 per cent year-on-year in January–September 2025 as FMCG companies tightened spends, even as food and beverages alone accounted for 21 per cent of total TV ad volume in that period.

According to TAM estimates, FMCGs account for 54 per cent of AdEx.

Dentsu’s India Ad Spend Report 2024, as reported by BestMediaInfo, also underlined FMCG’s heft, putting FMCG ad spends at Rs 31,428 crore in 2023 and estimating the category’s share at 34 per cent.

The December-quarter performance by FMCG companies points to a volume-led recovery, not only price-led growth.

Price-led growth can flatter toplines even when consumption is weak. Volume-led growth, especially across large portfolios, usually signals that brands are back in the market fighting for share.

After the GST-led disruption, distributors and retailers had focused on liquidating higher-priced inventory already in the channel.

Companies are now telling investors that trade has stabilised, and demand recovery is showing up in volumes, particularly in rural markets.

How much AdEx upside can FMCG recovery create?

Putting a credible range on AdEx upside depends on assumptions, but the market itself has offered a practical yardstick.

Typically, if FMCG festive spends rise by 10 per cent, the overall AdEx impact could be about 5.5 per cent, translating to nearly Rs 6,000 crore annually on an industry size of Rs 1.2 lakh crore.

Given the December-quarter recovery signals, a reasonable base case for FY26 could be an incremental 3–6 per cent uplift in overall AdEx, led primarily by FMCG, as brands move from restraint to share-defence and growth-led marketing.

At an industry base of around Rs 1.2 lakh crore, a 3 per cent uplift implies about Rs 3,600 crore of incremental AdEx.

A 5.5–6 per cent uplift implies roughly Rs 6,600–Rs 7,200 crore of incremental AdEx.

This range is consistent with how FMCG’s share amplifies small changes. If FMCGs account for 54 per cent of AdEx, even mid-single-digit increases in FMCG budgets can add meaningfully to total market growth.

It also aligns with what the market saw on TV: when FMCG pulls back, TV volumes soften sharply, as seen in the 10 per cent decline in January–September 2025.

A recovery in volumes and confidence does not automatically mean a full snapback, but it usually restores at least part of that lost intensity, especially ahead of summer and the festive cycle.

The GST tailwind

The GST reset continues to be an important overlay because it affects both demand and advertiser confidence.

This festive season, AdEx saw an incremental boost of Rs 5,400 crore, backed by GST rate rationalisation lifting consumer demand across categories such as FMCG, consumer durables and automobiles.

If the consumption recovery sustains beyond the December quarter, the GST-linked tailwind becomes less of a one-off festive story and more of a base that supports steadier, planned marketing spends across FY26.

The near-term watchpoint is whether FMCG sustains the recovery into the March quarter, and how aggressively large players pursue market share through the summer season and the next festive cycle.

If volume growth holds and margins remain supportive, the market is likely to see FMCG-led advertising budgets rebuild first in performance and commerce-linked formats, and then broaden into sustained brand media.