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Porter's Five Forces

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every
industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is
frequently used to identify an industry's structure to determine corporate strategy. Porter's model can
be applied to any segment of the economy to understand the level of competition within the industry
and enhance a company's long-term profitability. The Five Forces model is named after Harvard
Business School professor, Michael E. Porter.

The Five Forces model is widely used to analyze the industry structure of a company as well as its
corporate strategy. Porter identified five undeniable forces that play a part in shaping every market
and industry in the world. The five forces are frequently used to measure competition intensity,
attractiveness, and profitability of an industry or market.

Porter's five forces are:

1. Competition in the industry

2. Potential of new entrants into the industry

3. Power of suppliers

4. Power of customers

5. Threat of substitute products

Current Scenario
 FMCG market reached US$ 52.75 billion in FY18.
 The rural FMCG market reached US$ 23.63 billion in FY18.
 The online FMCG market reached US$ 20 billion in 2017.

Forecast
 FMCG market is expected reach US$ 103.70 billion by 2020.
 The rural FMCG market is expected to grow to US$ 220 billion by 2025.
 The online FMCG market is forecasted to reach US$ 45 billion in 2020.

GROWTH IN INDIAN FMCG SECTOR

 Revenues of FMCG sector reached Rs 3.4 lakh crore (US$ 52.8 billion) in FY18 and are
estimated to reach US$ 103.7 billion in 2020F. The sector is projected to grow 11-12 per cent
in 2019.
 The sector witnessed growth of 16.5 per cent in value terms between July-September 2018;
supported by moderate inflation, increase in private consumption and rural income. It is
forecasted to grow at 1213 per cent between September-December2018.
 The Union Budget 2019-20 initiatives to increase consumer spending among middle class are
expected to boost consumer confidence and improvedemand generation for branded consumer
products.
 FMCG sector to gain support for growth from Inland Waterways Authority of India (IWAI)
multi-modal transportation project of freight village at Varanasi which will bring together
retailers, warehouse operators and logistics service providers, investment worth Rs 1.7
billion(US$ 25.35 million).
 FMCG industry expected to grow 12-13 per cent in fourth quarter FY19.
URBAN MARKET

Accounting for a revenue share of around 55 per cent, urban segment is the largest contributor
to the overall revenue generated by the FMCG sector in India.

Rural segment is growing at a rapid pace and accounted for a revenue share of 45 per cent in
the overall revenues recorded by FMCG sector in India. FMCG products account for 50 per
cent of total rural spending.

In the last few years, the FMCG market has grown at a faster pace in rural India compared
with urban India. In 2018-19, revenues from the rural segment are expectedtogrow 15-16 per
cent outpacing.

Demand for quality goods and services has been going up in rural areas of India, on the back
of improved distribution channels of manufacturing and FMCG companies.

FMCG urban segment is expected to have a steady revenue growth at 8 per cent in FY19.
RURAL SEGMENT
In FY18, rural India accounted for 45 per cent of the total FMCG market.
Total rural income, which is currently at around US$ 572 billion, is projected to reach US$ 1.8 trillion
by FY21. India’s rural per capita disposable income is estimated to increase at a CAGR of 4.4 per
cent toUS$ 631 by 2020.
As income levels are rising, there is also a clear uptrend in the share of non-food expenditure in rural
India.
The Fast Moving Consumer Goods (FMCG) sector in rural and semi-urban India is estimated to cross
US$ 220 billion by 2025.
The revenue of FMCG’s rural segment is forecasted to grow to 1516 per cent in FY19 from
estimated10 per cent inFY18.
INCREASING ONLINE USERS BOOST ONLINE FMCG SALES

India’s increasing internet penetration, rising digital maturity along with developing infrastructure has
helped boost online transactions.
The online FMCG market is forecasted to reach US$ 45 billion in 2020 from US$ 20 billion in 2017,
backed by growth in online users from 90 million in 2017 to200 million in 2020E.
By 2020, about 40 per cent of FMCG consumption is estimated to be digitally influenced

Threat of substitutes
With high presence of multiple brands in the market, it is not a challenge for consumers to switch
from one product to another. Strategic decisions like price point and quality play key roles in
attracting consumers. With narrow product differentiation under many brands, it’s rather easy for a
consumer to switch to another brand. The threat of substitutes is informed by switching costs, both
immediate and long-term, as well as a buyer's inclination to change.

Competitive rivalry
Many players are expanding into new geographies and categories and modern retail share is expected
to be valued $180 billion in 2020. The FMCG industry has been a highly fragmented industry as more
companies enter the market. If Wipro is diversifying and expanding its product range in energy
drinks, detergents and fabric conditioners, Patanjali will spend US$743.72 million in various food
parks across the country. Also, launch of private label brands by big retailers, which are competitively
priced with offers and discounts, will limit competition for weak brands.

Bargaining power of buyers

While rising incomes and growing youth population have been key growth drivers of the sector, brand
consciousness has also aided demand.With low switching cost inducing customers to shift to other
products, there will only be more demand for new products. Also, the availability of same or similar
alternatives, backed by strong influence of marketing strategies will help the sector. India’s consumer
spending is expected to increase to US$ 3.6 trillion by 2020.

Threat of new entrants

Any new competition in the market poses threat to the existing players in the industry. With
investment approvals of up to 100 per cent foreign equity in single brand retail and 51 per cent in
multi-brand retail, the market is expected to be crowded. Also, companies will be forced to spend
aggressively on advertisement, which will only hurt the business in the long run.

Bargaining power of suppliers

Big FMCG companies are often in a position to dictate prices through local sourcing from a
fragmented group or key commodity suppliers. Suppliers can exert pressure on businesses and even
buyers by raising prices, lowering quality or reducing product availability. Such decisions mostly
affect the buyers.
STRATEGIES ADOPTED

Promotions and offers

 FMCG companies are trying to influence consumers with intelligent deals.

 Firms like ITC offers combo deals to the consumers. For example, in the case of soaps and
cosmetics; 4 soap cases are offered at the price of 3, selling the range of deodorants for men
and women at a discounted price.
 Amazon India is planning to invest significantly over the coming months for expanding its
grocery and food business, launching more products and categories and forming new
partnerships with huge grocery and supermarket chains.
 In May 2018, Amazon India targets to capture 100 million customers in the next 5 years by
providing more features in Prime and Alexa
Research online Purchase offline

The internet enables consumers to make their own research on the kind of products or commodities
they want to purchase. 1 in3 FMCG shoppers goes online 1st and then to the stores.
About 43 per cent of new car-buyers in cities select the model online and purchase it from dealer.
New product launches
Keeping in mind the changing tastes of the Indian consumer, FMCG companies are introducing new
products to gain market share.
In FY19, ITC made more than 60 launches in the Fast Moving Consumer Goods (FMCG) segment in
India.
In February 2018, industry major Britannia announced that it will introduce 50 new products by the
end of 2018-19.
Godrej Consumer Products Limited(GCPL) is also planning to launch various new products in FY19.

Expansion
In February 2019 India’s leading FMCG Contract Manufacturer Hindustan Foods Limited received an
investment of US$ 22 million from Convergent Finance LLP for its expansion.
Dabur to invest Rs 250-300 crore (US$ 37.29-44.75 million) in FY19 for capacity expansion and is
also looking for acquisitions in the domestic market.

Customisation
Product Flanking: Introduction of different combinations of products at different prices, to cover as
many market segments as possible.
Emami, has decided to rework on its overseas strategy by planning manufacturing and acquisitions in
overseas markets. The company plans to re-work on its product portfolio by getting into new
categories with higher buying preference and revamp its distribution networks.
Green initiatives to lower costs
FMCG companies are looking to invest in energy efficient plants to benefit the society and lower
costs in the long term.
HUL fulfils 80 per cent of its power requirement for its Sumerpur plant from solar energy. The
company has been able to reduce the carbon footprint of its manufacturing plants by 13 per cent in
FY17.
Joint Venture
In August 2018, Fonterra announced a joint venture with Future Consumer Ltd which will produce a
range of consumer and food service dairy products.
Analytics
Hindustan Unilever Ltd (HUL) implemented a transformational programme called Connected 4
Growth (C4G) to help drive business growth by increased speed to market, faster decision making,
localised and swifter innovation.
Patanjali uses Oracle and SAP for Enterprise Resource Planning (ERP), they will further standardise
the application on SAP. It plans to use machine learning for quality control and product enhancement.
They are also in talks with Net App for big data solution
Product/ Category Expansion
As of August 2018, Nestle India is planning to introduce special masala noodles, dips and dark
chocolates which will expand its product offering
http://www.in-beverage.org/

Indian Beverage Association

Mr S R Goenka, President

Leading Indian companies with direct and allied interests in the non-alcoholic beverage industry have
come together to form the Indian Beverage Association (IBA). These companies include Dabur India
Ltd, Red Bull India Pvt. Ltd, Tetra Pak India Pvt. Ltd, Pearl Drinks Ltd, Bengal Beverage Ltd,
Jain Irrigation Systems Ltd, Coca-Cola India and Pepsico India Holdings Pvt. Ltd. The Indian
Soft Drinks Manufacturers Association (ISDMA) is also a member of the IBA. The Indian Beverage
Association is the first such industry organization in India. It intends to act as a common voice for the
non-alcoholic beverage industry and play an increasingly significant role in the growth of this sector, a
sector that drives the economy by providing employment opportunities and driving Income growth.

IBA aims to bring together all stakeholders to a common platform to promote growth of the non-
alcoholic industry. The Association will serve as an inter-face between the industry, the government
and the public, besides providing a unified and focussed viewpoint in respect of legislative and
regulatory matters. It will also serve as a platform to share and exchange knowledge and information
on industry best practices related to non-alcoholic beverage Industry. We are hopeful that we will
shortly be able to get other leading players of the industry to join the Association.”
 Objectives
 To act as a catalyst to enable the non-alcoholic beverage industry to play an increasingly significant
role in the growth of the national economy.
 To act as an interface between the industry, on the one hand, and Governments, Regulatory institutions
and similar bodies, on the other, apart from interacting with other apex Chambers in the formulation
of policies and rules that facilitate the non-alcoholic beverage industry to play a useful and
constructive role,keeping safety of consumers as a primary objective.
 To facilitate the framing, development and dissemination of best practices related to environment,
quality, manufacture, and other relevant areas, for continuing to make available to the consumers safe
and healthy non-alcoholic beverages.
 Providing a common platform to share and exchange knowledge and information including with
regard to Industry best practices connected with non-alcoholic beverage Industry.

Indian Dairy Association (IDA)

Established in 1948, Indian Dairy Association (IDA) is the apex body of the dairy industry in India.
The members are from the cooperatives, MNCs, corporate bodies, private institutions, educational
institutions, government and public sector units. IDA functions very closely with the dairy producers,
professionals & planners, scientists & educationists, institutions and organisations associated with the
development of dairying in India.
The IDA since has a history of around six decades now, it has had the privilege of being headed by
several Presidents and some of them were of national and international fame. The luminaries like
Sardar Datar Singh, Dr. K.C. Sen, Dr. Z.R. Kothawalla, Dr. D.N. Khurody, Dr. V. Kurien, Dr. P.
Bhattacharya were the past presidents of the IDA.
IDA has been providing a common forum to knit the dairy fraternity together and thus, over the years,
it has emerged as the reigning czarina of information. The Association is managed by an apex policy
making body called the Central Executive Committee (CEC). The CEC is headed by President and
supported by two Vice-Presidents and 19 Executive Committee Members.
The ongoing CEC is spearheaded under the leadership of Dr. G.S. Rajorhia, IDA has emerged as a
platform for assimilation and dissemination of knowledge, as an important tool for policy making in
the dairy sector, in India. Besides, the IDA, in the recent time, has also succeeded to focus itself at the
national and international fora.

The IDA's Head Quarter is in Delhi and the zonal branches are in Bangalore, Kolkata, Mumbai and
Delhi. It has State Chapters at Anand (Gujarat), Thrissur (Kerala), Jaipur (Rajasthan), Chandigarh
(Punjab), Patna (Bihar), Karnal (Haryana), Chennai (Tamil Nadu), Hyderabad (Andhra Pradesh) and
Eastern UP Local Chapter.

The objective of the Association is the advancement of dairy science and industry, farming, animal
husbandry, animal sciences and its branches including dairy farming & research on breeding, and
management of dairy livestock; and towards that end the association will seek:

 To provide opportunities for the dissemination and exchange of knowledge and ideas gained
from experiments and experience through meetings, conferences, seminars and for
collaboration between persons and/or institutions interested in research & planning and those
in production, processing and marketing;
 To practice and promote a high standard of objectivity, scientific expertise and technical
proficiency;
 To encourage and promote scientific research and development related to dairy, dairy farming
as defined under the Section I — Definitions of Rules and Regulations of Association;
 To promote and participate in every way the rational and economic development of dairy
science, industry and farming (as defined under the Rules & Regulations) in the country in
association with cooperatives, industry, or any other organization, national or international,
having similar aims and objectives;
 To assume any responsibility or functions when asked to do so, on behalf of Government
towards the advancement of dairying;
 To collaborate with societies, associations, or any other organization, national or
international, having similar aims and to participate in meetings held in India or abroad
centered around similar objectives;
 To promote standards (qualitatively and otherwise) and to foster the growth of the dairy
industry in general and for the purpose engage in consultancy activities, set up laboratories
and do such like or other things as are necessary for the purpose;
 To adopt, as and when required, an appropriate logo for the Association and to permit the use
thereof by its members on such terms as may deem appropriate;
 To promote dairying as a part of Animal Husbandry activity in particular and agricultural
farming in general for the benefit of livestock and agricultural farmers;
 To organize training, exhibition and help in the establishment of dairy farm as a part of
Animal Husbandry activity for the benefit of agricultural, livestock & dairy farmers, in
pursuance of objectives of the Association;
All India Food Processors' Association (AIFPA)

PRESIDENT. Dr. Subodh Jindal

All India Food Processors' Association (AIFPA)was established in the year 1943 by visionaries
who pioneered the Food Processing Industry in India that too in the most turbulent period of World
War-II and the Indian Freedom Struggle. They perceived the need for scientific management of the
vast panorama of Agro-Food Sector, with an emphatic focus on the development, promotion and
establishment of Food Processing Industries in the country. The objective was to prevent the wastage
of fresh farm produce through its preservation and value addition, so as to make it available round the
year at affordable prices to the common consumer. At the same time, it was the only way to save the
poor farmer from perennial economic losses caused by distress sale of his perishable farm produce.
AIFPA takes pride in having completed its long journey of 75 years of dedicated and selfless service
and expresses its gratitude to all the stake holders of the Food Processing Sector in India including all
the concerned Central & State Government Agencies, and acknowledges with pleasure their support
 and the rich and holistic knowledge resource of its members related to product development,
manufacturing and quality control of all kinds of Food Products guaranteed to be safe for
consumption.

Mission
The prime objectives of the Association include the following:-

1. To promote, encourage and support Indian Food Processing Industries and raise the technical
standards, product quality and safety to match global standards.
2. To actively participate in evolving quality standards & safety measures under the Food Safety and
Standards Act-2006.
3. To seek redressal of the problems of the food industry that impedes their growth and development.
4. To conduct Workshops & Training Programmes to acquaint about GMP, GHP & HACCP and new
Technological Developments etc. and also organise National/International Seminars.
5. To collect, classify and circulate statistics and other information relating to production of agri-horti
produce, production of processed foods in India and agri-food exports from India.
6. To encourage research projects to study technical problems relating to the Industry.
7. To conduct and promote market research/market studies in India and abroad on processed food
products.
8. To institute Awards and Scholarships to encourage Food Scientists and Technologists, administrators,
consultants and executives who help in the growth and development of the Food Processing Industries
in India.
9. To publish a bimonthly technical Journal i.e. “Indian Food Packer” and monthly “E-Newsletter” as a
non-profit activity, which aims to keep the food processing units abreast of the latest worldwide
developments in Food Processing, new product & processes, additives, research programmes,
regulatory issues etc.
 https://www.ndtv.com/business/marketdata/domestic-index-bse_bsefmc
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https://sinewave.co.in/blog/how-gst-has-impacted-the-fmcg.aspx
https://www.avalara.com/in/en/blog/2017/09/post-gst-impact-fmcg-sector.html

Fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy. There are
three main segments in the sector food and beverages which accounts for 19 per cent of the sector,
healthcare which accounts for 31 per cent and household and personal care which accounts for the
remaining 50 per cent.

The FMCG sector has grown from $ 31.6 billion in 2011 to $ 49 billion in 2016. The sector is further
expected to grow at a CAGR of 20.6 per cent to reach US$ 103.7 billion by 2020. FMCG revenue
grew 14.8 per cent during October-December 2017. FMCG sector is expected to register net revenue
growth of 11.8 per cent in Q4 March 2018.

Product Previously taxed Currently taxed Companies impacted

at at

Detergents 23% 28% HUL, P&G, Jyothy Laboratories

Shampoo 24-25% 28% HUL, P&G, Dabur, Himalaya,

Patanjali

Sanitary napkins 10-11% 18% P&G Hygiene and Health Care

Skincare 24-25% 28% HUL, Dabur, Himalaya, Patanjali

Hair dyes 23-28% 28% Godrej Consumer Products

Ayurvedic medicine 7-10% 12% Dabur, Emami

Toothpastes, soaps, hair 22-24% 18% Colgate-Palmolive, HUL, P&G

oil

Paints 25-26% 28% Asian Paints, Berger Paints,

Nerolac

Branded paneer 3-4% 5% Nestle, Mother Dairy

Butter, ghee, cheese 4-5% 12% Amul, Nestle, Mother Dairy

Impact of GST on FMCG business costing-

1. Logistics costs
The GST has put up a positive effect on reducing the logistics cost, which has benefitted the FMCG
companies a lot. GST is helping the FMCG companies to save some amount of logistic and transport
charges. Previously, the distribution costs was around 2 to 7% of the total cost, but now it has now
dropped to 1.5%. Now, at least, the companies save their costs and do more towards the society’s
welfare. So, the GST has impacted in a very positive way for companies, as they have made the
supply chain management to run smoothly and effectively, in regards to timely payment of tax,
correct claims of input credit, and CST removal too. This tax deduction in logistics and transports
have benefitted the consumers to avail the company products in much cheaper rates.

2.Warehouse
Warehouses are used to distribute the goods locally. The finished goods from the factory arrives at
warehouses and they get distributed to retailers and customers in the specific areas. Previously, the
warehouses were set up on at those states where the effective tax were low, and this also affected the
transport costs for the distributors and the manufacturers. But now, the distributors and the
manufacturers don’t have to worry about their costs, as GST is helping them to cut their costs. With
the execution of GST in the country, the FMCG companies can set up their warehouses anywhere, in
any state.

3.Foreign Investment
The foreign investments has now increased in India. Our country is now a unified market. Thanks to
GST. The FMCG goods that are manufactured in India has now become more competitive in the
international markets, because of its low production cost. As the GST has reduced its export cost and
production cost both. The implementation of GST has lowered almost all taxes and made it easier for
manufacturers and business owners to sell in the global and international market without any hassle.

4.Business Cost
The GST implementation has reduced all taxes and some taxes have been totally removed from the
Indian Market and the CST has been removed under the GST regime. The CGST and SGST has
replaced many other taxes such as Service Tax, Central Excise Duty, Custom and Octroi Duty etc.
You might have noticed these replacements and cost reductions on your restaurant bills, shopping
bills. It feels really good, when you see your money is getting saved on your bills. The business cost
have also been reduced and totally cut. GST have changed VAT. Now if you are a business owner,
you don’t have to pay the different amount of taxes in every state. The GST is one tax system for all
over India, so you have got rid of other small taxes and amounts

In order to control inflation and to ensure that GST does not have negative impact for the consumer,
the Government tried to align GST rates with the indirect tax effective rates (excise plus VAT / sales
tax and other taxes such as octroi duty, entry tax). GST rate for products of mass consumption such as
aata, edible oils, cereals, milk, etc was pegged at 5%.

For products such as medicines, fruit juices, pencils ball point pens, GST rate was pegged at 12%.
Products such as hair oils, soaps, tooth pastes, kajal sticks, were classified in the 18% bracket. Many
items of daily consumption such as shampoos, deodorants, detergents, cosmetic products, chocolates
were placed in the 28% bracket.

The Government’s rationale for 28% rate was to match the tax rate with the pre GST rates of 12.5%
central excise duty and 12% -15% of VAT. However, a high percentage of consumer goods are
manufactured in Excise free zones in Himachal Pradesh, Uttarakhand, the North East states and
enjoyed central excise duty exemption or duty refund, thereby making the pre GST effective indirect
tax rate in the range of 21%-23%. The Government addressed the said concern by reducing the GST
rates for 175 plus products from 28% to 18% with effect from November 15, 2017.

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Impact of GST on FMCG Sector:

Under pre GST regime, maximum FMCG products were taxed at rates ranging from 22 percent to 24
percent for example, detergents were taxed at the rate of 23 percent, shampoos and beauty
preparations were taxed at the rate of 24 percent to 25 percent, tax on sanitary towels and napkins was
about 10 percent to 11 percent, tax on some daily use FMCG products like paneer, ghee, cheese,
butter and milk was about 3 to 5 percent.

Under the GST regime, FMCG products are taxed under 0%, 5%, 12%, 18% and 28%. However if
you deeply examine the impact of GST on individual products, we can see that tax rates of some
products have increased, like tax on shampoo (Now taxed at 28%), detergents (Now taxed at 28%),
sanitary towels (Now taxed at 12%) which is higher than before. Under GST tax on toothpaste, hair
oil, and soaps is deducted from 22 percent to 18 percent. Whereas some daily use products like milk,
eggs, fresh vegetable, wheat, rice, etc. are tax free. Big companies of this industry like Hindustan
uniliver, patanjali, and ITC welcomed GST with open arms. However few firms of this sector are
negatively affected by the GST tax rate, which still is changing.

Logistics cost:
Distribution and Transportation plays a vital role in FMCG industry. Distribution cost of FMCG
sector in pre GST regime constituted 2 to 7 percent which is dropped to 1.5 percent in GST regime.
The FMCG companies are saving a considerable amount in terms of logistic expenses. Due to true
and fair supply chain management, payment of tax, availability of input credit, CST elimination
resulted in reduction of overall transportation and distribution cost. Reduction in cost and taxes lead to
cheaper consumer goods.

Warehousing cost:
Acc to CRISIL the warehousing cost for FMCG products is likely to reduce by 25-50 percent due to
implementation of GST. Before the GST regime companies had to setup warehouses in those states
where the effective tax rate were minimum irrespective of distance, but under GST companies can
maintain their warehouses wherever they like. Reduction in warehousing cost also makes
commodities cheaper.

Input tax credit:

Reconciliation facility of inward and outward supplies is available on the GST network, In case of
mismatch between the details of “outward supplies” (Sales) uploaded by the supplier in GSTR1 and
the inward supplies (Purchases) uploaded by the recipient (Purchaser) in GSTR2. Such mismatch is to
be communicated to the purchaser. If the mismatch is not corrected by the vendor within prescribed
time period, the purchaser (Buyer) will be accountable to pay the differential GST amount along with
the interest. This provision of GST lays down the liability for non-compliance on the purchasers, i.e.
the FMCG companies, as against their vendors.

No input credit on free samples:

In the FMCG industry promotional schemes like Buy 1 Get 1 Free are very common. Under the
previous regime no VAT had to be charged on free samples, however according to sec 17 (5) of the
CGST Act, an input tax credit will not be available for goods given as gifts or free samples. Non
availability of input credit increases promotional expenses of FMCG companies, which results in
increasing overall prices of FMCG products.

Working capital requirement:

Implementation of GST increased working capital costs of FMCG companies, as their payments are
getting blocked at various levels in value chain. It also increased working capital requirements of
FMCG Dealers and Wholesalers as manufactures of FMCG hold up their payments due to uncertainty
about the tax liability and the tax sett-off for the supplied goods and services.

Advancement in effective tax rates:

Products like aerated and beverages now attract 28% GST in addition to 12% cess. It is because of
such advancement in effective tax rates prices of such goods increased in the market. Under GST
regime, effective tax rate of 40% is opposed to policy of maintaining equality with the pre GST
weighted average tax which was below 40, stated by leading beverage companies.

FMCG distributors:
FMCG distributors didn’t get much affected by the implementation of GST. A distributor gets his
Fixed Margin on purchases from company. Moreover distributor is unable to evade tax under GST as
the complete value chain is tracked online.

Common man (Consumer)

It is a consumer who bears the burden of indirect tax. Overall GST put a mixed impact on common
man. Due to increase in inflation rate from 4% to 8% on many food items included grains and cereals
affected middle class and below property line (BPL) class badly, apart from it common man is looted
in the market on the name of GST.

CONCLUSION:
Implementation of GST throughout India (included Jammu and Kashmir) is the biggest change in
India. It is an outstanding step for a comprehensive indirect tax reform in India. Implementation of
GST has put mixed impact on FMCG sector. Those FMCG companies whose tax incidence lowered,
like Dabur, HUL, ITC have started to pass on the effect in the form of low prices. Changes in GST
rates on regular intervals is very fruitful for some firms but not for other firms in the FMCG industry.
GST may become game changer in the long run for the FMCG sector and may also have deep impact
on Indian economy as well. But the short term impact reveals that GST has failed in bringing down
overall cost of commodities, interestingly cost of some products has increased much more than cost of
pre GST regime.

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https://www.paisabazaar.com/tax/gst-rates/
Revisions in GST Rates

Till date, there has been 37 GST council meetings till October 2019 in which the council has
recommended various relief measures regarding GST rates on goods and services. GST Council
Meeting is chaired by the Finance Minister providing clarification and recommendation regarding
various changes made in the GST rates of the goods and services.

GST Council Meetings

Some of the important GST council meetings held till date are mentioned below:

1st and 2nd GST Council Meeting: The first meeting of GST council was held on 22-23 Sep, 2016. It
focused on rolling out GST on 1st April, 2017. It decided the regulation under composition scheme
and GST rates and threshold limit to pay taxes. The second meeting was held on 30th Sep, 2016.
GST drafted rules for registration, payment process, returns, invoices and other issues for the
taxpayers.

21st GST Council Meeting: The 21st meeting was inaugrated in Hyderabad on 9th Sep, 2017. Council
decided major changes in the tax rates from 18% to 12%. Also, due dates of filing GSTR-1, GSTR-2,
GSTR-3 were extended.

22nd GST Council Meeting: The 22nd council meeting decided that AC restaurant tax rate revised to
12% from 18%.
Major changes in the GST rates, businesses with turnover up to INR 1.5 crore allowed to file quarterly
returns, No GST on advances received by SMEs were the key aspects discussed at GST council meet.

23rd GST Council Meeting: 10th Nov, 2017 witnessed the 23rd GST council meeting in Guwahati,
Assam. This meeting focused on analysis of revenue, modification on rules of Anti- Profiteering and
GST Rates on certain items coming under 28% slab rates.

As per 23rd GST Council meeting on 10th November 2017

GST Rates for 178 items have been reduced from 28% to 18%

 Reduced from 28% to 18% W.e.f. 15th Nov 2017 – Shampoo, Perfume, tiles, watches
 Reduced from 18% to 12% – Condensed milk, refined sugar, diabetic food
 Reduced from 12% to 5% – Desiccated coconut, idli dosa batter, coir products
 Reduced from 5% to Nil – Duar meal, khandsari sugar, dried vegetables
 For Restaurants within hotels, and room tariff less than Rs. 7,500 the GST rate is 5%. Also,
the credit of ITC paid on inward supplies cannot be taken.
 For Restaurants within hotels, and room tariff greater than Rs. 7,500 the GST rate is 18%
and credit of ITC paid on inward supplies can be availed.
25th GST Council Meeting: On 18th Jan, 2018 GST council meeting was held at Vigyan Bhawan,
New Delhi. It focused on building some anti-evasion measures on GST. Some items were re-
considered under 18% slab rate from 28% slab rate.

GST Rate Changes for Goods:

Nil Rated Goods:

1. Vibhuti
2. Parts and accessories for the manufacture of hearing aids.
3. De-oiled rice bran

Rates reduced from 18% to 12%

1. Sugar boiled Confectionery

2. Drinking water packed in 20 litres bottles
3. Biodiesel
4. Drip irrigation system including laterals, sprinklers
5. Mechanical Sprayer
6. Certain listed Bio-pesticides (12 in nos)
7. Fertilizer grade Phosphoric acid
8. Bamboo wood building joinery

Rate reduced from 18% to 5%

1. LPG supplied to Household Domestic Consumers

2. Raw materials and Consumables needed for Launch vehicles, Satellites and Payloads (Both
CGST and IGST Rates)
3. Tamarind Kernel Powder
4. Mehendi paste in cones

Rates reduced from 12% to 5%

1. Articles of straw, of esparto or of other plaiting materials

2. Velvet fabric [with a condition that no refund is claimed on ITC]

Rates reduced from 3% to 0.25%

Diamonds and precious stones
GST Rate increased from 12% to 18%
Cigarette filter rods
Rate increased from 0% to 5%
Rice bran (other than de-oiled rice bran)

: The twenty-fourth meeting of GST Council was held on 16th Dec, 2017 through video conference.
Agenda of the discussion was introduction of e-Way Bill System by the given deadline, refund of
provisionally accepted input tax credit.
26th GST Council Meeting: This GST meeting was held at Vigyan Bhawan, New Delhi on 10th Mar,
2018. GST council primarily focused on exports, interstates movement of goods, filing returns and
others. The main agenda of the meeting was E-Way Bill, Simple Return Filings, GSTR 3B deadline
extension, Composition Scheme.

27th GST Council Meeting: The Finance Minister Arun Jaitley chaired the 27th GST Council
Meeting on Thursday, 18th Jan, 2018 where certain changes and recommendations were made
through a video conference in New Delhi. In this meeting, various provisions were made for B2B
dealers, GSTR 3B and GSTR 1 filing to be continued same. Furthermore, council also decided to look
into the matter of cess in sugar as well as digital transactions.

28th GST Council Meeting: The 28th GST meeting held at New Delhi on 21st July, 2018 witnessed
major changes in the GST rates in the country. The government has focused on changes made in GST
rates on various goods and services and also has simplified the GST return filing mechanism.

GOODS

S.NO Items New Old

Rate rate

1 Rakhi (other than that of precious or semi-precious material ) Nil 18%

2 Sanitary Napkins Nil 12%

3 Circulation and commemorative coins Nil 5%

4 Raw material for broom Nil 12%

5 Stone/Marble/Wood Deities Nil 5%

6 Sal leaves and its products Nil 18%

7 Khali dona Nil 18%

8 Coir pith Compost Nil 5%

9 Chenille fabrics and other fabrcis under 5801 5% 12%

10 Handloom dari 5% 12%

11 Phosphoric Acid (fertilizer grade only) 5% 12%

12 Handmade Carpets, Textile Floor, Coverings 5% 12%

13 Knitted cap/topi having retails sale value exceeding Rs. 1000 5% 12%

14 Kota Stones and Simliar Stones (other than polished) 5% 18%

15 Ethanol for sale to oil marketing companies for blending with fuel 5% 18%

16 Solid Bio fuel pellets 5% 18%

17 Marine Engine 5% 28%

18 Bamboo Flooring 12% 18%

19 Hand Operated Rubber Roller 12% 18%

20 Brass Kerosene Pressure Stove 12% 18%

21 Zip and Slide Fastener 12% 18%

22 Handicrafts (Excluding handmade) 12% 18%

23 Handbags including pouches and purses; jewellery box 12% 18%

24 Fuel Cell vehicle 12% 28%

25 Televisions upto 68 cm 18% 28%

26 Glaziers’ putty, grafting putty, resin cements 18% 28%

27 Refrigerators, freezers, water cooler, milk coolers, ice cream 18% 28%
freezer

28 Washing Machines 18% 28%

29 Food Grinders & mixer 18% 28%

30 Vacuum Cleaners 18% 28%

31 Paints and Varnishes (including enamels and lacquers) 18% 28%

32 Shavers, Hair Clippers 18% 28%

33 Hair Cleaners 18% 28%

34 Storage water heaters 18% 28%

35 Immersion heaters 18% 28%

36 Hair Dryers, Hand Dryers 18% 28%

37 Electric Smoothing irons 18% 28%

 38 Scent Sprays 18% 28%

39 Toilet Sprays 18% 28%

40 Pads for application of cosmetics or toilet preparations 18% 28%

41 Lithium-ion batteries 18% 28%

42 Powder Puffs 18% 28%

43 Special purpose motor vehicles 18% 28%

44 Work Trucks (Self-propelled, not fitted with lifting or handling 18% 28%
equipment)

45 Trailers & Semi trailers 18% 28%

List of Goods Exempt

Fortified Milk exempt 5%

Recent GST Rate Changes on Services

SERVICES

Rate Change

Services New GST Rates Old GST Rates

Supply of e-books 5% 18%

Supply of Multimodal Transportation 12% Nil

 List of Services Exempt

Senior Citizens

1. Sevices provided by Coal Mines provident fund organisation to the PF subscribers

2. Services provided by Old age home run by state government / central government to the citizens
aged more than 60 years upto Rs. 25000

GST exempted on the administrative fee collected by National Pension System Trust

4. Services provided by an unincorporated body or non profit entiy registered under any law to own
members upto Rs. 1000 per year of membership fees.

Agriculture/ Farmers

1. Services by way of artificial insemination of livestock (other than horses)

2. Services provided by FSSAI to food businesses.

3. Services provided by way of warehousing minor forest produce

4. Services provided by the installation and commissioning by DISCOMS for extending electricity
distribution network for agricultural use.

29th GST Council Meeting: The 29th GST Council Meeting concluded on the 4th of August 2018.
This time around no rate cuts were announced due to data suggesting low GST revenue collections.
However, the GST Council did propose the development of a mechanism to provide cashback of 20%
on various digital transactions up to maximum Rs. 100 in order to promote cashless transactions. The
decision was also taken to form a panel to examine various tax and compliance relief proposals with
respect to small taxpayers and MSMEs.
30th GST Council Meeting: The 30th GST Council Meeting was held on 28th September 2018 and
one of its key highlights was an observed decrease in the revenue gap under the GST regime as
compared to the earlier VAT regime. One of the key reasons for this increase was attributed to higher
revenue collections from various north eastern states. The council also discussed the imposition of a
calamity cess to help distressed states that have been affected by natural calamities such as floods. No
GST rates of any products or services were changed at this meeting.

31st GST Council Meeting: The 31st GST Council Meeting held on 22nd December 2018 featured a
number of rate changes in terms of goods and services. However no goods or services witnessed an
increase in rates and the decrease in rates included tax rate change from 5% to nil (packaged
vegetables, etc.) as well as 12% to nil (music books). Some key construction materials also witnessed
a reduction in rates such as marble rubble (18% to 5%) and fly-ash bricks (12% to 5%).

Here is a summarised version of the list of rate cuts on both Goods and Services:

List of rate changes at 31st GST Council Meeting

SL.no List of Goods/Services Changes in

Tax Rate

1 Vegetables provisionally preserved but unsuitable for immediate 5% to Nil

consumption

2 Vegetables cooked/uncooked via steamed, frozen or boiled (branded) 5% to Nil

3 Music Books 12% to Nil

4 Parts for manufacturing renewable energy devices falling under chapter 5%

84, 85 or 94 of Tariff

5 Natural cork 12% to 5%

6 Fly ash blocks 12% to 5%

7 Walking sticks 12% to 5%

 8 Marble rubble 18% to 5%

9 Agglomerated cork 18% to 12%

10 Cork roughly squared or debugged 18% to 12%

11 Articles of Natural cork 18% to 12%

12 Movie Tickets < or = Rs 100 18% to 12%

13 Premium on Third party insurance on Vehicles 18% to 12%

14 Accessories for Handicapped Mobility Vehicles 28% to 5%

15 Power banks 28% to 18%

16 Movie Tickets > Rs 100 28% to 18%

17 Video game consoles, equipments used for Billiards and Snooker and 28% to 18%
other sport related items of HSN code 9504

18 Retreated & used pneumatic Rubber Tyres 28% to 18%

19 Colour Television Sets & monitors up to “32 Inches” 28% to 18%

20 Digital & Video Camera recorders 28% to 18%

21 Pulleys, transmission shafts, cranks and gear boxes under HSN 8483 28% to 18%

22 Tax rate on Air travel of pilgrims reduced* 28% to 18%

*For travel by non-scheduled/chartered operations for religious pilgrimage which are facilitated by
GoI under bi-lateral agreements.
Others:
-GST on the composite supply of goods attracting 5% GST rate where it is supplied along with the
supply of construction services and other goods for solar power plant, is now levied as follows:

 70% of value is considered as supply of goods and taxed at 5% GST.

 Remaining 30% of the EPC contract value is supply of service and attracts standard tax rate
for service.

-Rate of 5%/18% to be applied based on transaction value of footwear.

-Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing 5%/12%
(depending on the value).

Goods recommended for exemption

 Supply of gold by Nominated Agencies to exporters of article of gold Jewellery

32nd GST Council Meeting: The 32nd GST Council Meeting held on 10th January 2019 did not
feature any announcements in terms of GST rate rationalization however the decisions did feature a
focus on smaller businesses. One of the key decisions at this GST Council meeting was the
introduction of a GST composition scheme for individuals/businesses providing services or mixed
services (other than restaurant services) with a turnover limit of Rs. 50 lakhs with a tax rate of 6%.
Additionally, the exemption for other schemes registered under composition scheme was also
increased to Rs. 1.5 crore from the current level of Rs. 1 crore (for plains states).

33rd GST Council Meeting: The 33rd GST Council Meeting held on 24th February, 2019 introduced
much anticipated rate cuts for the residential real estate sector with effect from 1st April, 2019. The
announcement also provided clarity regarding the definition of affordable housing.

34th GST Council Meeting: The 34th GST Council Meeting held on 19th March, 2019 mainly
focused on providing clarifications regarding the new real estate rates of 1% (for affordable housing)
and 5% (for non-affordable housing) applicable from 1st April 2019 onwards.

35th GST Council Meeting: The 35th GST Council Meeting was held on 21st June, 2019 was the
first to be conducted after the 2019 General Elections. The Council extended the due date to file
annual GST returns. Additionally, the GST Council clarified that Aadhaar OTP can be used for GST
registration.

36th GST Council Meeting: The 36th GST Council Meeting held on 27th July, 2019 was primarily
aimed to reduce GST rate on electric vehicles (12% to 5%). The GST rates on electric vehicle
chargers and charging stations were also reduced to 5% from 12%. Moreover, the deadline for
submission of forms CMP-08 and CMP-02 were extended.

37th GST Council Meeting:

The 37th GST Council Meeting held on 20th September, 2019 led to various changes in GST laws
for MSMEs, rates of certain goods and services. The main decisions include waiver of GSTR-9A
filing for FY 2017-18 and 2018-19. It also announced the introduction of New GST Return System
from April, 2020. Know the other GST changes proposed by the 37th GST Council Meeting.
GST Council had its 37th meet held at Goa on Friday ,20th September 2019
GST Rate Revision effective from 1 October 2019

Item Current Rate New Rate

Plates and cups made of flowers, leaves and bark 5% Nil

Caffeinated Beverages 18% 28%+12%

cess

Supplies of Railways wagons & coaches (without refund of 5% 12%

accumulated ITC)

Outdoor Catering (without ITC) 18% 5%

Diamond Job work 5% 1.50%

Other Job work 18% 12%

Hotels (Room Tariff of Rs.7501 or above) 28% 18%

Hotels (Room Tariff from Rs 1,001 to Rs 7,500) 18% 12%

Woven/ Non-woven Polyethylene Packaging bags 18% 12%

Marine fuel 18% 5%

Almond Milk 18%

Slide fasteners 18% 12%

Wet grinders (consisting of stone as a grinder) 12% 5%

Dried Tamarind 5% Nil

 Semi-precious stones- cut & polished 3% 0.25%

Specified goods for petroleum operation under HELP* Applicable 5%

Rate

*Hydrocarbon Exploration Licensing Policy

Item Current Rate New Rate

Cess on Petrol Motor Vehicles (Capacity of 10-13 passengers) 15% 1%

Cess on Diesel Motor Vehicles (Capacity of 10-13 passengers) 15% 3%

GST Exemption available for:

 Supplies to FIFA- specified persons for the Under-17 Women’s Football World Cup in India
 Supply to the Food and Agriculture Organisation (FAO) for specified projects in India
 Imports of certain defence goods not made indigenously (up to 2024)
 Supply of silver/platinum by specified agencies (Diamond India Ltd) for export
 Import of Silver or Platinum by specified agencies (Diamond India Ltd)

GST Rate Changes at 37th GST Council Meeting

The new GST rates will be applicable from 1st October, 2019. The following are the key instances of
GST rate reduction announced in the 37th GST Council Meeting:

Goods Old GST Rate New GST rate

Dried tamarind 5% Nil

The following are the key instances of GST rate increments announced at the council meeting:

Goods Old GST Rate New GST rate

Caffeinated beverages 18% 28% + 12% cess
GST/IGST Updates at 37th GST Council Meeting

The council also announced GST/ IGST exemptions from 1st October 2019 in the following instances:

 Supply of goods and services to Food and Agriculture Organization (FAO) for specified
projects in India

Jewellery Sector- Exemptions from GST/IGST

The following items and services in the jewellery sector will be exempt from GST/IGST from
1st October, 2019:

 Import of silver/platinum by specified nominated agencies, including Diamond India Limited

(DIL)
 Supply of silver/platinum by specified nominated agency, including DIL to exporters for
exports of jewellery

Uniform GST Rate Polypropylene/Polyethylene

A uniform rate of 12% GST will be applicable on Polypropylene/Polyethylene Woven and Non-
Woven Bags and sacks, whether or not laminated used for packing of goods (from present rates of
5%/12%/18%) from 1st October, 2019.

GST Concessions for Specified Period

 Fishmeal has been exempted from GST for the period 1st July, 2017 to 30th September, 2019.
However, any tax collected for this period should be deposited.

Other Rate Changes

 Aerated drink manufactures will be excluded from composition scheme.

 Almond milk will attract 18% GST.

Changes in GST rates on Services

The changed GST rates on services as per announcement made at the 37th GST Council meeting be
applicable from 1st October, 2019.

Hospitality and Tourism

GST will be reduced on hotel accommodation.

Transaction Value per unit per day (Rs.) GST Rate

Rs. 1000 and less Nil

Rs. 1001 to Rs. 7500 12%

Rs. 7501 and more 18%

GST reduced on Outdoor Catering Services, excluding those in premises having daily tariff on unit
of accommodation of Rs. 7501 or more from 18% with input tax credit (ITC) to 5% without ITC.

Job Work Service

 GST will be decreased from 5% to 1.5% on supply of job work services in relation to diamonds.

GST Exempted Services

Sector Exempted Service (Nil GST Services)

Storage of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane,
Warehousing jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured
tobacco, betel leaves, tendu leaves, rice, coffee and tea.

Conditional exemption of GST on export freight by air or sea till 30th September,
Transportation
2020.

Other Exemptions announced at 37th GST Council Meeting

 Services provided by an intermediary to a goods supplier or recipient when both the supplier
and recipient are located outside the taxable territory.
 Services related to FIFA Under-17 Women’s World Cup 2020.
FMCG (Fast Moving Consumer Goods) is also known as consumer packaged goods. Items in this
category include all consumables (other than groceries/pulses) people buy at regular intervals. The most
common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish,
packaged foodstuff, and household accessories and extends to certain electronic goods (cells). These
items are meant for daily or frequent consumption and have a high return. Their shelf life is low and
daily usability is high. FMCG is a compulsory purchase without which the day to day activities of
normal household activities are dependent on.

Attributes of FMCG Products:

1. From the consumers' perspective
 Frequent purchase
 Low involvement (little or no effort to choose the item)
 Low price
 Short shelf life
 Must use for daily consumption
2. From the marketers' angle 
High volumes 
Low contribution margins 
Extensive distribution networks
 High stock turnover

The Indian economy has always been heavily dependent on cash transactions. As of 2015, card and
electronic transactions only accounted for a meagre 2% of overall consumer payments transactions in
the country. On 8th November 2016, the Indian government announced the demonetization of the
500 and 1000 rupee notes, the two biggest denomination notes. These notes accounted for 86% of the
India‘s cash supply. The government ‘s goal was to eradicate counterfeit currency, fight tax evasion,
eliminate black money gotten from money laundering and terrorist financing activities, and promote a
cashless economy.

Euromonitor International’s Industry Forecast Model allows companies to use income elasticity as
a proxy to understand the probable impacts of the short-term cash crunch on various industries.

The one-year driver elasticity for GDP per capita for key industries in India is given below. Industries
with low income elasticity, such as hot drinks, home care and packaged food, are less likely to be
impacted adversely due to the short-term cash crunch. Many of the large categories within these
industries are considered staples. This implies that, irrespective of the change in the income of the
consumer, the relative change to the growth in the industry will be less than when compared to industries
such as beauty and personal care, alcoholic drinks and soft drinks, which require more discretionary
spending.

The Industry Forecast Model can also be used to dive deep into various subcategories within an industry.
For example, the one-year income elasticities for the various subcategories within packaged food are
given below:
Essentials with lower income elasticity such as rice, edible oils and dairy products will be impacted less
when compared with products such as ready meals and processed fruits and vegetables. The impact felt
depend on the frequency of purchase of packaged food through various retail channels.

Impact of Demonetization on FMCG sector In FMCG Industry, more than 80-85% transactions between
retailers to distributors are cash based. Further though most of the large FMCG companies do not extend
credit to distributors, but distributors tend to extend credit to retailers typically for a period ranging
between 7 days to 3 weeks. Under-reporting of sale at retailer level and transactions without bill by
distributors is a rampant practice in trade and is something ignored by FMCG players being off book.
All this money which used to typically find its way back in circulation has been made redundant by the
governments move. The money which is genuine was also stuck since majority of it is in denominations
of Rs 500 or Rs 1000 and the process of conversion is tedious and with a limit of Rs 4000 per day.
These transactions being high value in nature was seen taking time before the order is re-established.
The impact of the government‘s move to eliminate parallel economy on FMCG (fast moving consumer
goods) companies can be seen in two parts. One is on the distribution channel as small retailers who
make up the bulk of sales mostly deal in cash. While consumers will recover relatively quickly as soon
as the new currency notes become available, trade channels may take a few weeks as their transactions
will be of higher value. If their purchases decline, that will affect sales growth reported by companies.
The second impact is at the consumer level, facing the liquidity crunch. Consumers have been making
purchases based on higher priority needs and zero on needs which now sounded them trivial to them.
The last quarter of 2016, therefore, showed some impact of this development on sales growth of
companies. If the rural economy revives as expected, then the headwinds from the government‘s move
will be easier to manage. Even otherwise, it does not appear as if FMCG companies will face any lasting
impact because of this decision.

The BSE FMCG index was down by 2.1% .In the Macro Data released on the 13th of January, 2017,
it was that the retail inflation fell to 3.41%. Vegetable markets, departmental stores, milk booths were
found empty for many days. As a result, products with very short shelf life were almost expired for
usage, resulting in a loss again. Almost Rs2.6 trillion packed goods industry mostly transact in cash at
the lower level of supply chain. And more than nine million retailers in India are Kirana store who deals
in cash. Since the rural economy is mainly cash based and wholesaler dependent, this shortage of cash
has led to slow down in rural sales and demand.
Consumers din‘t had cash. Moreover, paucity of cash had jammed the movement of trucks. Most of the
stocks of Consumer durables, consumer non-durables, Food and beverages settled on red in the last
quarter. S&P BSE Fast Moving Consumer Goods index declined almost 6% from November 8, 2016,
to December 8, 2016. In food processing companies ADF food Industries declined almost 13%,
Britannia declined almost 6%, Nestle declined almost 2%.In beverage and distilleries United beverages
declined almost 5.2%, United Spirits declined almost 4.2% in the same period. Personal care companies
like Dabur India, Colgate, Emami also dipped in the last quarter. Domestic appliances companies like
Bajaj Electric and Hawkins too faced the dip.

Out of nine fast-moving consumer goods companies whose December quarter results are out, only two
companies, ITC and Godrej Consumer Products, reported a year-on-year increase of 9.7% and 9.2% ,
respectively. Emami’s revenues were flat. Sales from the hotel business of ITC are not considered here.
Colgate Palmolive reported the highest decline of 8.6%
https://arseam.com/sites/default/files/published-papers/p5i3v5ijmfm%2027-
32%20%20Ms%20Harsimran%20Kaur%20%20Mar-2017.pdf

https://www.moneylife.in/article/did-demonetisation-affect-fmcg-companies/49719.html
https://www.posist.com/restaurant-times/trending/beat-demonetization-effect-maintain-
footfall-restaurant.html

https://www.thestatesman.com/business/indian-restaurant-industry-employed-7-3-million-
people-2018-19-nrai-1502753854.html

https://www.posist.com/restaurant-times/trending/footfalls-restaurants-drop-result-
demonetization.html

The Indian restaurant industry employed 7.3 million people in 2018-19. The organised food
service sector, which is only 35 per cent the total market, contributed Rs 18,000 crore in taxes
in 2018-19. The number is expected to more than double if the unorganised sector becomes
organised, according to National Restaurant Association of India president Rahul Singh.

Indian food service industry is the largest service sector in India after retail and insurance and
is 20 times of the film industry, 4.7 times of hotels and 1.5 times of the pharmaceutical
sector..

After demonitization From juice stall owners who have been observing a drop of 75 percent in
their sales to an average of 20-30 percent drop in casual and fine dining restaurants,
demonetisation has trapped the entire F&B industry that has witnessed a 15-40 percent crash in
sales overall.
As reported by National Restaurant Association of India (NRAI), fine dining restaurants,
organized food retail chains and restaurants at malls combined, have witnessed a nearly 40
percent drop in their business.

How it effected

Mobile Card Machines

Incorporation of payments through all kinds of debit cards, credit cards, other online payment
gateways or online wallets like Paytm, Mobikwik etc.
Ensuring a well-integrated virtual terminal. Equipping delivery boys with mobile card machines
for home delivery orders.

Online Food Ordering and Payment Provision

Following demonitization, online payments saw a record surge. The number of app downloads of
Paytm, an online payment platform, tripled, with a 250% surge in overall transactions and their
value, suggesting that cashless payments are here to stay. Thus, having online food ordering and
payment facility is mandatory to survive in the cashless environment. There are several online
food ordering facilities that support plastic payments and digital wallets.

Robust Point of Sale Software

With the sudden increase in digital payments as a result of demonetisation, Point of Sale software
has suddenly become the need of the hour, instead of just being a convenience. A number of small
restaurants and food businesses still use handwritten receipts instead of generating POS bills, which
results in a lot discrepancy in records. Since customers are now paying mostly through debit card
 OTC Pharmaceuticals
The Over-the-Counter Pharmaceuticals market comprises over-the-counter medicine that can be
purchased without a medical prescription. The market is subdivided into Analgesics, Cold and
Cough Medication, Digestives and Intestinal Remedies, Skin Treatment products and Vitamins
and Minerals. It includes both products which are exclusively sold in pharmacies and products which
can be purchased elsewhere. Sales by hospitals are not included.

Revenue in the OTC Pharmaceuticals market amounts to US$ 3,936m in 2019. The market is
expected to grow annually by 4.3% (CAGR 2019-2023).
In relation to total population figures, per person revenues of US$2.88 are generated in 2019

Chart Title
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Analgesics Cold and Cough Medication

Digestives and Intestinal Remedies Skin Treatment products
Vitamins and Minerals
Key O. T. C. Players in India
The Republic of India has got a number of O. T. C. players. To name some of the renowned O. T. C.
players in this country are:
Cipla Limited

 Nicotex
 Cofsils
 Active Women Daily Calcium Tablets
 i-pill
 DOG SPRAY

Emami

 Boro plus
 Zandu bam
 Fast relief
 Zandu kesari jivan
Glaxo Smith Kline (G. S. K.)
 Horlicks
 Crocin
 Eno,
 Iodex
 Sensodyne

Novartis

 Otrivin
 Calcium Sandoz
Reckitt Benckiser Group Plc.
 Dettol,
 Clearasil,
 Strepsils,
 Gaviscon,
 Lemsip,
 Nurofen

https://business.mapsofindia.com/fmcg/sector/reckitt-benckiser.html
https://www.medplusmart.com/manufacturer/NOVARTIS%20OTC
 Food & Beverages
 Revenue in the Food & Beverages segment amounts to US$570m in 2019.
 Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 20.0%, resulting
in a market volume of US$1,181m by 2023.
 User penetration is 17.6% in 2019 and is expected to hit 31.3% by 2023
 The average revenue per user (ARPU) currently amounts to US$2.38
 In global comparison, most revenue is generated in China (US$22,102m in 2019)

In-Scope

 Food (fresh and packaged foods, fruits, vegetables, pasta, snacks, sweets, refrigerated
products, frozen food.
 Soft drinks and alcoholic drinks .
The eCommerce market segment Food & beverages contains the online sale of fresh and packaged
foods (excluding baby food), delicacies and beverages. This market segment covers for example the
sale of fruit, vegetables, pasta, snacks, sweets, refrigerated products, frozen food, soft drinks and
alcoholic drinks via a digital channel. The most significant channel for the online sale of food and
beverages are, at present, the online shops of the large supermarkets and warehouse stores, for
example, walmart.com or subscription services such as HelloFresh.

Revenue
1400

1200

1000

800

600

400

200

0
2017 2018 2019 2020 2021 2022 2023
Nestle
Kitkat
Maggi
Nescafe
Cerelac
Milkybar

Britannia

BISCUITS
Good Day
Crackers
NutriChoice
Marie Gold
Jim Jam + Treat
Bourbon
RUSK
Toastea

CROISSANT
Treat Croissant

ITC
Kitchens of India, Aashirvaad, Sunfeast, Mint - O, Candyman, and Bingo

Parle Agro

Appy
Appy Fizz
Bailley
Bailley Soda
Café Cuba
Dhishoom
Frio
Frooti
Frooti Fizz