Fast Moving Consumer Goods (FMCG) goods, popularly named as consumer packaged goods, play a vital role as a necessity

and as an inelastic product. The Indian FMCG sector is the fourth largest sector the economy with a total market size of Rs. 167,100crs. The market is estimated to grow to US$ 100 billion by 2025, according to market research firm Nielsen. In the last decade the FMCG sector has grown at an average of 11% a year; in the last five years, annual growth accelerated to 17% The FMCG Industry is characterized by a wellestablished distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. FMCGs are slowly and gradually positioning and deeply penetrating in the fast growing rural market. The Rural mind-set is open to consumption of newer, more contemporary food categories and as a result, drive consistent growth FMCG industry to be Rs.4000-6000 billion industry by 2020. The FMCG sector in India continues on a strong growth path with both Urban and Rural India contributing to its growth. Rural India contributes one third of FMCG sales in India Growth driven by increasing consumption led by rise in incomes, changing lifestyles and favourable demographics. According to Nielsen, FMCG growth was 10.7% in the rural market and 10.8% in the urban market during the quarter ended December 2011; for the quarter ended March 2012, while growth in the urban market improved to 16.5%, it rose even higher, to 17.2%, in the rural market. Rural India accounts for more than 700 Million consumers or 70% of the Indian population and accounts for 40% of the total FMCG market. The Rural market is a large market space with very low organized player penetration. Across the globe, the Indian rural market is probably the single largest unit of opportunity. Also with changing lifestyle and increasing consumer demand, the Indian FMCG market is expected to cross $80 billion by 2026 in towns with population of up to 10 lakh. The sector has a tremendous opportunity for growth in India, with the growing population, the rising incomes, education and urbanization, the advent of modern retail, and a consumption-driven society.

Government Policies and Regulatory Framework:

Investment Approval: Automatic investment approval up to 100 per cent foreign equity for NRI and overseas corporate bodies. These investments are allowed in food processing segments such as coffee and tea. FDI in organized retail: India currently allows 100 per cent FDI in Cash & Carry segment and 51% in single-brand retail, which is expected to be further increased to 100%. India is also expected to allow 51% FDI in multi-brand retail, which will boost the nascent organized retail market in the country. Priority Sector: The Government of India recognizes food processing and agro industries as priority sectors. Relaxation of license rules: Industrial licenses are not required for almost all food and agro- processing industries, barring certain items such as beer, potable alcohol and wines, cane sugar, and hydrogenated animal fats and oils as well as items reserved for exclusive manufacturing in the small-scale sector. Statutory Minimum Price: In October 2009, the government amended the Sugarcane Control Order, 1966, and replaced the Statutory Minimum Price (SMP) of sugarcane with Fair and Remunerative Price (FRP) and the State- Advised Price (SAP).