AI Can Transform India’s FMCG Chain, But Scaling Is Proving to Be Hard

By Pritha Pahari

What?

India's biggest FMCG companies are using AI to decide what goes on shop shelves and what farmers grow. Hindustan Unilever's Shikhar app links about 1.4 million kirana stores to the company and suggests what each shop should stock.

Colgate-Palmolive's Smile Stores reaches over 1.7 million outlets. It studies a shop's sales history and even scans shelf photos to spot empty gaps.

Experts say no single firm leads the way. "There isn't one single company that dominates AI in Indian FMCG," said Dr Srinivas Padmanabhuni, CTO of AiEnsured.

He says ITC is strong on the farm side, while HUL goes deeper on retail and distribution.

Why?

India's FMCG sector earned roughly Rs 25 trillion in FY25 and is expected to reach around Rs 58 trillion by FY30. Yet much of that still moves through small neighbourhood stores that rely on salesman visits and hand-counted stock.

AI fills that gap. Quick commerce, which is growing 70-80% a year, forces companies to know what is selling right now. AI can predict demand, plan delivery routes and catch faulty products before they leave the factory.

The clearest success story is outside India. Unilever and Walmart Mexico share sales and stock data in real time, so a purchase in a store signals the factory almost at once. Shelf availability went above 98% while inventory fell.

What next?

The hard part is scale. Padmanabhuni estimates that only 20-30% of AI activity in Indian FMCG is truly at scale. The rest is still pilots or simple productivity tools. Even HUL has not said how many shops actually use Shikhar's AI suggestions.

Experts also warn about hype. AI-personalised offers for toothpaste or biscuits rarely repay their cost, they say. Cashierless stores and flashy chatbots are also risky spends. The safer bets are clean data, better restocking, quality inspection and support for sales teams.

Smaller companies face a tougher road. Many lack the money, data and skills to begin. Sajal Srivastava, who runs a food-stall business in Noida, does not use AI at all. He says he will adopt it only when it solves a real problem.

Kirana shopkeepers face their own hurdle. Typing hundreds of products into an online catalogue takes too much time, and loose grains and spices have no barcodes. Whether these tools actually help shopkeepers is still mostly unstudied.

The next phase will be defined by this divide, a few giants running AI across forecasting, distribution and quality, and a much larger group still noting sales in a notebook.

Closing that gap, with simple and affordable tools, may matter more than any new product launch.

The ice cream shop that makes money when it's cold

28 Wishes sells ice cream in Los Angeles. Below 70°F, sales fall about 20%. The weather is out of their hands. Rent isn't.

So the owners started putting about $20 a day into Kalshi weather markets, taking the cold side. The days that keep customers away now pay something back.

This is hedging. Big companies have done it for decades, buying protection against bad weather, fuel spikes and rising rates. It used to take a broker, a trading desk, and an order size no corner shop could meet.

Kalshi opens it up. Contracts on weather, fuel prices, inflation, tariffs and regulation, starting at a few dollars. Take a position on the outcome that would hurt you. If it hits, the payout softens it. If it doesn't, the contract expires and the good month was the point.

See how other owners are doing it at Kalshi.com/hedging

Rs 3.63 lakh crore

That’s the value of homes sold across India’s Tier-1 cities in H1 2026, according to the India Housing Report by real estate data and analytics firm CRE Matrix and the National Association of Realtors–India.

Backdrop: The figure was essentially unchanged from the record H1 2025 level, suggesting the residential market has plateaued after three years of strong growth.

But the headline masks weaker underlying demand. Developers sold around 2.58 lakh homes, down 2% from a year earlier. At the same time, they launched nearly 2.98 lakh new units, up 7%, meaning new supply is now growing faster than absorption.

The Scoop: The average ticket size rose just 2% to Rs 1.41 crore, the slowest increase in three years, indicating that the price cycle is cooling. The market is also becoming more uneven across cities. Mumbai Metropolitan Region (MMR) overtook the National Capital Region (NCR) as the largest housing market, accounting for 26% of sales value, while Bengaluru recorded 25% growth in sales value. NCR, meanwhile, saw sales value fall 24%.

Impact: Abhishek Kiran Gupta, CEO and Co-Founder of CRE Matrix, said the market is entering a new phase, with growth depending “less on price escalation and more on breadth” as developers align new launches with genuine demand.

Tata Trusts Move To Avoid Listing

Tata Trusts has proposed a “strategic reorganisation” of Tata Sons by merging Tata Electronics Systems Solutions and Tata Consulting Engineers into the holding company. The restructuring is designed to make Tata Sons an operating business again, taking it outside the RBI’s NBFC and core investment company rules that could force a listing. Tata Trusts owns 66% of Tata Sons.

The Signal: The merged entity would have Rs 1.05 lakh crore of operating revenue as of March 2026, against Rs 40,072 crore of income from financial assets. Group investments would account for less than 90% of net assets, helping Tata Sons avoid the regulatory thresholds for both an NBFC and a CIC.

Context: The proposal comes days after Tata Sons’ board decided to consider a public listing despite Noel Tata’s opposition.

The Trusts are now asking the board to seek RBI approval for the merger and surrender Tata Sons’ CIC registration, while preserving its status as an unlisted private company.

Supreme Court Seeks Faster Food Labels

India's Supreme Court questioned on Monday why the government wanted to delay adopting warning labels on packaged food items, pushing for swifter action on food labelling, Reuters reported.

Fast Facts: Justice JB Pardiwala asked regulators "why do you want to waste so much time when we are concerned about health issues," adding that the court would soon issue a final order, Reuters reported.

Last week, India's food regulator said notification and public consultation on stricter warning labels would need four months, followed by a further year for implementation.

The proposed rules require red hexagon-shaped labels on packaged items high in salt, sugar or fat. India backs a red warning if added sugar exceeds 3% of solid products by weight and fat exceeds 4.2%.

The Shift: The All India Food Processors Association, representing Indian and foreign food giants, told the court that red warning symbols could confuse consumers, who associate red with the mandatory non-vegetarian identification mark.

The group did not oppose front-of-pack warnings but objected to the proposed thresholds and called for warnings to be decided on single serving consumption rather than per 100 gm.

Minister Denies Coal Shortage

Union Coal Minister G Kishan Reddy said on Monday there was no coal shortage despite higher thermal power demand, monsoon-hit mining and weak hydropower. "We are supplying by rakes and roads," he said, adding that thermal demand had risen 12-15% and the temporary disruptions did not amount to a shortage.

Critical Moment: Coal inventories at grid-connected power plants nearly halved last month from a year earlier to their lowest in almost three years, according to a recent CRISIL Intelligence report.

An El Niño-driven dry monsoon curbed hydropower and lifted cooling and irrigation demand, with evening shortfalls reaching 7.7 gigawatts this month, forcing coal plants to fill the gap.

The Lead: Invoking Section 11 of the Electricity Act, the government last week directed captive plants above 50 megawatts to run at full capacity and sell surplus power on exchanges. Heavy rains in Chhattisgarh, Odisha and Jharkhand have flooded mines, keeping pressure on supplies.

Factories Drive Industrial Rebound

India's industrial output grew 8% year-on-year in August, up from a revised 7.4% in July, government data showed on Monday. The expansion was driven by strong manufacturing and electricity generation, even as mining output contracted.

Overview: Manufacturing rose 9%, up from a revised 8.2% in July. Electricity generation climbed 12.3%, while mining fell 5.6%. "In a record performance, the manufacturing sector recorded growth of 8% or more in the last three consecutive months," the statistics ​ministry said in an official statement.

The government now calculates factory output using producer prices instead of wholesale prices, a change introduced earlier this year.

Setup: Capital goods output rose 16.9% and consumer durables 11.1%, while consumer non-durables recovered to 2.1% growth after a decline in July. Industrial output for April-August grew 6.7%, compared with 4.2% a year earlier.

Future: Rajani Sinha, Chief Economist at CareEdge Ratings, said industrial production was expected to remain resilient, but flagged risks from geopolitical tensions, volatile energy prices, rising inflation and weather-related uncertainties.

Crisil’s principal economist Dipti Deshpande, meanwhile, said that growth could somewhat moderate because of elevated costs, higher interest rates and softer global demand. “The ongoing conflict in West Asia has resulted in a sharp increase in crude oil prices and other industrial input costs, which could pressure both industrial production and corporate profitability,” Deshpande said.

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Why Oil Price Uncertainty Will Continue To Batter Markets

On Episode 992 of The Core Report, financial journalist Govindraj Ethiraj talks to Jaya Dhindaw, Executive Program Director, Sustainable Cities and Director at WRI India Ross Center as well as Kanan Bahl, Founder at Fingrowth Media.

• Why Oil Price Uncertainty Will Continue To Batter Markets.

• What’s Driving A Rise In India’s Index Of Industrial Production (IIP) ?

• The List Of Prominent Companies’ Stock Price Hitting 52-Week Lows Is Growing.

• How And Why India Should Revisit Its Very Definition Of Urbanisation ?

• India’s Insurance Regulator Sends The Industry Scurrying And Stockprices Falling. What’s Next ?