Urban India's FMCG Shift

DECODE THE NEWS

Urban FMCG Growth Isn’t Trailing Rural, It’s Just Downtrading

What? 

India’s rural markets appear to be outpacing urban markets in terms of fast moving consumer goods (FMCG) consumption for most of FY25, believe industry players and analysts. However, Kantar has found that the urban basket has grown too, but it’s not reflected in total numbers due to a higher amount of downtrading when consumers replace costlier, well-known brands with local, unbranded products in the urban centres.

“The broad story which most manufacturers keep talking about is urban tightness and rural areas showing green shoots. That’s true if you look at only the large brands, branded purchases, et cetera. If you include local brands and unbranded sales, actually speaking, urban areas have grown more or less at par with last year. Rural is where we are seeing some amount of sluggishness,” K Ramakrishnan, MD - South Asia World Panel Division of Kantar, told The Core.

Branded Sales Vs Overall Else

Kantar’s data indicates that urban consumption is growing faster than rural consumption. In the January-March quarter of 2025, FMCG volumes grew 4.4% in urban areas, while rural areas grew at 2.7%. The overall growth for the quarter was at 3.5%, making it the slowest growth seen in the last eight quarters.

Kantar measures all incoming products into a household, and not just brands. It covers 85,000 households, with about 45,000 of them being urban, and the rest rural.

Another consumer intelligence firm, Nielsen IQ, which tracks branded sales, however, reported a different story.

As per its data, FMCG volume growth in rural areas has been surpassing urban for the last five quarters up till the January-March quarter. In the March quarter, rural growth was at 8.4%, whereas urban growth was at a mere 2.6%.

What Does This Mean?

Clearly, the urban markets are showing signs of downtrading. Especially in cases of edible oil, where consumers can shift to loose oil purchase, which takes sales away from branded players.

“There could be downtrading, and some smaller brands are gaining. If you look at it from that lens, urban is tight for formal players, larger brands. But urban consumption has not been suffering because they have been replacing it,” says Ramakrishnan.

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CORE NUMBER

358,737

That’s the total number of H-1B visa applications received for FY2026 — the lowest in four years, as per United States Citizenship and Immigration Services (USCIS) data cited by Business Standard. Registrations dropped 25% from FY2025’s 480,000, largely due to a new rule allowing only one entry per candidate, regardless of how many employers apply. Eligible applications fell to 343,981, while only 120,141 were selected. Analysts also cite rising application fees and over 260,000 global tech layoffs since 2024, including 52,000 this year—as reasons for the dip. Demand still outpaces supply, with 85,000 H-1B visas issued annually.

Made-in-China Check! The government is tightening quality controls on small consumer appliances — many imported from China — after raids found substandard products in Indian markets. A new Quality Control Order issued by the Department for Promotion of Industry and Internal Trade (DPIIT) mandates Bureau of Indian Standards (BIS) certification for items like electric recliners, beauty tools and battery-operated appliances. The order, effective March 2026, aims to boost local manufacturing and protect consumers, with compliance deadlines set for large firms by March 19, small firms by June 19, and micro enterprises by September 19.

AGR Fallout Continues. Tata Sons may have to inject fresh capital into its telecom unit Tata Teleservices after the Supreme Court dismissed its plea—along with those by Airtel and Vodafone Idea—for waivers on interest and penalties linked to adjusted gross revenue (AGR) dues. Business Standard reported quoting sources that Tata Tele now owes Rs 19,256 crore and has a negative net worth of Rs 17,876 crore. With steep FY25 losses and no viable path to meet obligations, Tata Sons has issued a letter of comfort, signalling likely financial support. Credit agencies have flagged liquidity risks once the existing AGR moratorium ends in March 2026.

RBI Slows the Flow. The Reserve Bank of India will pause its liquidity injections after infusing Rs 8.57 lakh crore (~$100 billion) since December, Reuters reported. A large dividend transfer to the Centre—estimated between Rs 2.5–4 lakh crore—will boost government spending, making further RBI liquidity support unnecessary, say analysts. With this, “core liquidity” could exceed Rs 5 lakh crore, reducing the need for RBI to step in and purchases bonds in the open market until at least September. Bond yields, which had been falling, may now stabilise as markets adjust to this pause in monetary support.

Wheat Export Ban Continues! India has decided to extend its wheat and wheat products export ban, originally imposed in May 2022 after a dip in domestic production and falling procurement. The move will ensure price stability ahead of the upcoming festive and election season. Despite record wheat output and near-target procurement of 29.3 million tonnes, the government fears retail inflation and political backlash. Prices of staples like atta, maida and suji are under close watch. While exporters push for policy relaxation, officials say lifting the ban now could trigger market volatility.

HOW INDIA’S ECONOMY WORKS

The ‘Stark’ Findings Of How India’s Wealthy Avoid Taxes

Income tax is perhaps the subject of most interest during any Union Budget, and the debate of how much the Indian middle class is taxed is an endless one.

The biggest grouse among India’s salaried taxpayers has been that it is they who end up paying the most tax, while the rich, who earn much more than they do, also have similar tax slabs, and get away with paying much lesser.

In this episode of How India’s Economy Works, Ram Singh, director of the Delhi School of Economics, told Puja Mehra that indeed the wealth-to-tax ratio reduces as people get wealthier.

“The real surprise is not that it comes down, that this ratio comes down, the absolute levels are something that is striking. The absolute levels at, let's say if we look at figure income wealth ratio for top 1%, wealthiest 1%, this ratio comes out to be about 2%, which is to say that in top 1% wealthiest Indians report income that is equivalent to about 2% of their wealth,” Singh said.

While the bottom of the wealth pyramid end up paying taxes on 100% of their wealth, the ultra-rich are able to avoid taxes on certain things thanks to loopholes.

What are some ways in which the wealthy are able to use these loopholes to legitimately avoid paying tax?

PODCAST

On Episode 587 of The Core Report, financial journalist Govindraj Ethiraj talks to R. K. Behera, Chairman at RSB Group as well as Advocate Shrish Deshpande, consumer court expert. 

• Markets rise after gaining confidence

• Morgan Stanley quotes India’s new terror doctrine as part of the bull case for 89,000 Sensex

• India’s auto components industry is holding steady

• Another bank shuts down, will depositors be in the lurch?

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas