Indian FMCG firms face rising input costs and tighter margins in H2
Rising prices for palm oil, sugar and packaging are squeezing profit margins for Indian fast-moving consumer goods companies, prompting cautious pricing after Diwali.
Indian FMCG companies are confronting heightened cost pressures in the September quarter, with key commodities like palm oil, sugar and packaging materials rising sharply and reversing earlier margin improvements. Naveen Malpani of Grant Thornton Bharat highlighted a 21% year-on-year increase in palm oil and an 18% rise in sugar prices, which have not been fully offset by price adjustments or operational efficiencies. Parle Products' chief marketing officer Mayank Shah said firms are trying to mitigate "margin shock" by cutting costs rather than passing all increases to consumers, and any price hikes are likely to be delayed until after Diwali.
Nestle India's chairman Manish Tiwary echoed concerns about food inflation, noting that while coffee and wheat may stay stable, sugar and edible oils will likely remain elevated. Analysts warn that continued commodity volatility, including potential El Nino effects, could keep margins under pressure throughout the second half of the fiscal year.
Why it matters
Higher input costs could force price hikes that may reduce consumer spending on everyday goods in India.
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