The retail and consumer goods sectors in India have been slowing down recently, signaling that they might not sustain the current path the Indian economy is taking. The nation is on a high growth path that is based primarily on consumption demand after the creation of structural bottlenecks, according to a report released by Ficci and KPMG on Monday.
The report speculates that the consumer goods sector could already be on a decelerating phase.
FY15 reports show that the consumer goods sector of India had decelerated to 7.5%, from the 10.6% posted for FY14, in terms of value. The fall was recorded mostly in food, OTC goods, home care, and personal care across India.
According to the same report, the structural limitations of India have not allowed the retail and consumer goods sectors to make complete use of the country’s overall potential.
The report also address a few key issues surrounding these sectors, including complicated policies, frameworks and a scarcity of sustainable infrastructure. Other issues that cannot be ignored are passoffs and counterfeit notes circulating within the economy.
The consumer packaged goods sector in 2014 was worth Rs. 3.2 trillion. The sector is expected to grow at a CAGR of 11.5% till 2019 to reach a net worth of Rs. 6.1 trillion. It has, however, become plausible for the consumer goods sector to witness an even higher growth rate to extend its 2019 net worth by Rs. 2.1 trillion. This addition could reach beyond the original projection that was purely consumption-driven.
The report also said that the additional growth can be possible should the companies in the sector adopt a “SMART” growth policy.