The Rs 60,000 crore (Rs 600 billion) FMCG sector is on a fast track and can grow at a scorching speed with assistance from the government's proposed fiscal incentives to boost rural income, according to a Federation of Indian Chambers of Commerce and Industry survey.
Growth in the FMCG sector during 2003-04 was led by bountiful rain, a spate of cost cutting measures and tax sops. The sector has grown 1.5 per cent in value terms.
The growth is in spite of rising raw material prices and the impact of series of price reductions slashing profit margins but raising sales volume, the survey said.
Various state governments have encouraged companies to set up manufacturing facilities. The excise and tax exemptions for units located in backward regions have encouraged many companies to set up new units.
Dereservation of items like hair oil and toothpaste have also led to the growth in the sector.