Indian FMCG sector is an important contributor to the country's GDP.

It is the
fourth largest sector in the economy and is responsible for 5% of the total
eefactory employment in India. This industry has witnessed strong growth in the
past decade. This has been due to liberalization, urbanization, increase in the
disposable incomes and affluent lifestyle. Furthermore, the boom has also been
catalyzed by the reduction in excise duties, de-reservation from the small-scale
sector and the concerted efforts of personal care companies to attract the
burgeoning affluent segment in the middle-class through product and packaging
innovations.

2.1 STRIKING FEATURES OF FMCG INDUSTRY

 Critical operating rules in Indian FMCG sector

 Heavy launch costs on new products on launch advertisements, free samples

and product promotions.

 Majority of the product classes require very low investment in fixed assets

 Existence of contract manufacturing

 Marketing assumes a significant place in the brand building Process

 Extensive distribution networks and logistics are key to achieving a high.

 level of penetration in both the urban and rural markets.

 Factors like low entry barriers in terms of low capital investment, fiscal
incentives from government and low brand.

 Awareness in rural areas have led to the mushrooming of the unorganized

sector.
2.2 INDIAN COMPETITIVENESS & COMPARISON WITH