NEW DELHI: Sales of fast moving consumer goods are set to surge by more than 10% in India during the current financial year, the Confederation of Indian Industry has predicted.

The CII suggested innovation, mergers, acquisitions, expansion into rural areas and overseas, alongside the introduction of smaller pack sizes - particularly appealing to low-income shoppers - should fuel growth.

Urbanisation, changing lifestyles, rising affluence among young shoppers, a "preference for branded products" and enhanced living standards in second and third tier cities are similarly stimulating demand.

As such, the CII forecast the FMCG market would experience a 13% uptick across the whole fiscal year, including gains of at least 20% for toothpaste, anti-ageing lines, deodorants and fairness creams.

Detergents, washing cakes and toilet soaps could all post double-digit improvements, while toothpowder, liquid soaps, shaving ranges and coconut oil record more modest increases falling between 2% and 6%.

"FMCG is the sector which has helped the Indian economy to emerge speedily from the impact of the global recession," said Chandrajit Banerjee, the CII's director general.

"Though rising food inflation and high input costs have hurt the FMCG sector in the first half of the financial year 2010-11, the industry is optimistic about its performance during the full year."

A major obstacle facing the category comes in the form of imitation goods, which are draining substantial resources.

"Fake or counterfeit products are a serious challenge before the industry. According to estimates, they amount to a loss of around 27bn rupees to the exchequer," the CII said.

Climbing expenditure relating to raw materials, packaging and logistics may also negatively influence manufacturers going forward, the organisation argued.

Inadequate infrastructure and the prohibition on foreign direct investment in multi-brand retail are among the other issues needing to be redressed.

Data sourced from Economic Times; additional content by Warc staff