The Centre has targeted the ecosystem that feeds into FMCG and form an indirect but powerful growth architecture for consumer-facing sectors
The Union Budget 2026 may not have unveiled headline-grabbing incentives for the fast-moving consumer goods (FMCG) sector, but it has quietly strengthened the very foundations on which the industry runs. Instead of direct sops, the Centre has targeted the ecosystem that feeds into FMCG, farmers producing higher-quality inputs, MSMEs manufacturing ingredients and packaging, distributors dependent on liquidity and cold-chain and freight networks that move goods to India’s expanding tier 2 and 3 consumption centres.
Measures such as the Rs 10,000 crore SME Growth Fund, expansion of Trade Receivables Discounting System (TReDS) for invoice discounting, investments in freight corridors and cold-chain infrastructure, Agriculture budget at Rs 1.32 lakh crore, and digital infrastructure upgrades together form an indirect but powerful growth architecture for consumer-facing sectors spanning food, beauty, personal care and packaged goods.
“The Union Budget 2026–27 strikes a well-calibrated balance between growth and stability. With higher capital expenditure, disciplined fiscal management and simplified taxation, it strengthens job creation and consumption while reinforcing India’s long-term global competitiveness,” stated N Venkataraman, Executive Director and Chief Financial Officer, Britannia Industries.
Strengthening FMCG’s Vendor Backbone
The proposed Rs 10,000 crore SME Growth Fund, expanded credit guarantees and deeper integration of TReDS into the payment ecosystem aim to address one of the sector’s working capital stress. FMCG value chains are inherently cash-cycle intensive, with payments often staggered across suppliers, distributors and retailers.
“The expansion of TReDS and improved credit access will alleviate working capital pressures for distributors and contract manufacturers, fortifying the entire FMCG ecosystem. For the sector, the Viksit Bharat agenda serves as a vital catalyst by synchronizing demand and supply-side enablers,” highlighted Rajiv Kumar, Vice Chairman, DS Group.
By reducing financial friction at the MSME level, the Budget helps reinforce the reliability of supply chains that large FMCG companies depend on but do not directly control. As compliance processes simplify and more small enterprises enter the formal setup, the sector stands to gain from a more predictable, scalable and quality-driven vendor ecosystem
“Initiatives such as the Rs 10,000 crore SME Growth Fund, deeper integration of TReDS with GeM, and stronger credit guarantees will meaningfully ease working capital constraints for small sellers, particularly in Tier 2 and Tier 3 markets where e-commerce is growing rapidly,” noted Vidit Aatrey, Co-founder, Managing Director and Chief Executive Officer (CEO), Meesho.
Value-added Agriculture Reshapes FMCG Inputs
Union Budget 2026 moves away from a volume-centric view of agriculture towards improving the quality, value and traceability of farm output. The Centre has proposed a dedicated programme for horticulture to expand high density cultivation of walnuts, pine and almonds. For animal husbandry, there is provision for providing loan-linked capital subsidy support scheme and supporting entrepreneurship and facilitating job creation.
“The government’s push towards credit-linked support for animal husbandry, development of FPOs and integrated approaches to improving farmer incomes will go a long way in reinforcing resilient, future-ready food value chains. Continued investment in agricultural infrastructure, innovation, and manufacturing capabilities not only empowers farmers but also enables food brands to deliver safe, nutritious, and responsibly produced food to Indian households,” pointed out Abhay Parnerkar, CEO, Godrej Foods.
The Budget supports high value agriculture, with coconut promotion scheme to raise production and dedicated programme for cashew and cocoa. Large scale clusters for vegetable production will be developed closer to major consumption centres. Promotion of Farmer-Producer Organisations (FPOs), cooperatives and startups for vegetable supply chains, including for collection, storage, and marketing are some of the key decisions. The push for biofortified crops and data-driven farming practices could help address both supply volatility and quality gaps.
“Finance Minister Nirmala Sitharaman stressed on the importance of high-value agriculture, allied sectors and technology-led farming. In her Budget speech, proposing targeted interventions to boost farmer incomes, create rural employment and modernise agricultural practices, all of which will contribute to the growth of organisations as ours and India’s overall food and beverage sector,” noted Ajay Mariwala, MD, Food Service India or FSIPL.
According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), between January 2000 to September 2025, Food Processing Industries attracted FDI inflows of USD 15.50 billion, the SBI report added.
The Next Consumption Engine
A recurring theme across the Union Budget 2026 is the push to deepen economic activity beyond metros, positioning tier 2 and 3 cities as the next drivers of consumption growth. Improved freight corridors, better last-mile connectivity and expanded cold-chain infrastructure reduce the cost and complexity of servicing non-metro markets.
“The food processing and frozen food (FFPF) sector will require faster, more predictable movement of products and improved port connectivity to enable companies to grow exports, reduce discarded product and bolster resilient cold chains to support supply networks,” highlighted Haresh Karamchandani, MD and Group CEO, HyFun Foods
Importantly, inclusion-led initiatives such as ‘She Marts’, which aim to expand market access for women-led micro-enterprises, add a new dimension to this consumption story. These community-owned retail outlets, to be set up within cluster-level federations, will provide structured and sustained market access for products manufactured by women-led Self-Help Groups (SHGs).
“For large retail and brand-led businesses, these measures create the right environment to expand responsibly into tier 2, 3 and rural markets, unlock new consumer demand and accelerate the creation of globally competitive Indian brands,” stated Rahul Shanker, Group CEO, Quest Retail (The Body Shop India).
Beyond physical infrastructure and supply-chain reforms, the Budget 2026 places strong emphasis on digital capacity, regulatory simplification and financial efficiency. Investments in domestic digital infrastructure, including data centres and cloud capacity, are expected to lower the cost of technology adoption for businesses across size. On the regulatory front, the shift from penalty-heavy frameworks to more fee-based compliance structures, along with continued digitalisation of GST processes, signals an effort to reduce friction in doing business.
“We particularly welcome the MAT credit set-off being allowed up to 25 per cent of the tax liability under the new tax regime. This move improves cash flows and makes the new tax regime smoother for companies with accumulated credits, freeing up capital for reinvestment into growth and consumption-led categories,” Sudhir Sitapati, Managing Director and CEO, Godrej Consumer Products or GCPL.
Taken together, the Union Budget 2026 signals a shift in approach from sector-specific incentives to strengthening the underlying architecture that supports consumption. For consumer goods companies, the gains may not be immediate, but over time, a more resilient supplier base, smoother capital cycles and lower distribution friction could prove more transformative than direct fiscal sops.
