Nepal turmoil a minor hurdle, GST cuts to lift FMCG growth: Abneesh Roy

Political unrest in Nepal has sparked concerns for FMCG companies with exposure in the region. However, recent GST cuts and easing pressures in the paints sector are expected to cushion the blow, according to Abneesh Roy.

Nepal Unrest: Limited Impact

Firms like ITC, Marico, HUL, Varun Beverages, and Bikaji have some presence in Nepal, but Roy sees the risk as manageable.

"The GST rate cut will boost overall consumption. The Nepal issue and floods in parts of India may have a minor impact, but not on a full-quarter basis," he said in an interview with ET Now.


He noted that Nepal accounts for just 2–3% of revenues for players like Varun Beverages, ITC, and Dabur. "The impact will be short-term. The bigger risk is political instability slowing GDP and supply chains, but it remains low single-digit exposure," Roy added.

Domestic weather patterns are also weighing on summer-driven categories like aerated drinks, talcum powders, and beer, which are seeing weaker sales due to excess rain.

GST Cuts to Drive Growth

On the positive side, GST reductions are expected to lift demand, particularly for low-priced essentials.

"Biscuits and snacks will benefit the most. With GST dropping from 18% to 5%, companies like Britannia can pass benefits to customers while also expanding margins," Roy explained.

He stressed that Nepal’s issues are temporary, unlike long global trade disputes, and government measures on packaging will ease the transition for FMCG firms.

Paints Sector Outlook

On paints, Roy was upbeat on both Asian Paints and Berger Paints.

"Industry volumes are recovering, and the new player is stabilising. We expect mid-to-high single-digit growth in H2," he said.

While heavy monsoons may delay demand for exterior paints in Q2, he clarified this was "postponement, not destruction."

The Bottom Line

Despite short-term headwinds from Nepal and erratic monsoons, GST-led consumption and recovering paint demand point to a stronger second half for FMCG and discretionary categories.