In the fast-moving consumer goods (FMCG) industry, particularly in food, Indian brands have been following Prime Minister Narendra Modi’s ‘vocal for local’ or localisation vision for a while now.
Emphasising on a self-reliant, or ‘aatmanirbhar’, India, the government has asked that products not just be made in India, but also for the promotion of local brands, manufacturing, and supply chain.
“When the Prime Minister said go ‘vocal for local’, he meant that products be made competitive vis-a-vis global brands. It didn’t mean that one must only buy products that have a logo ‘made in India’ on it,” RS Sodhi, MD, Amul, told BusinessLine.
“The Prime Minister’s ‘vocal for local’ and ‘local for global’ mantra has also brought out the significance for our local brands to have a global presence. India is the biggest and the fastest-growing market in the world for the majority of the product categories,” added Sodhi.
Indian brands
In the Indian FMCG market, Indian brands have been leaders in ‘Indian categories’ such as hair oils, chyawanprash health supplements, whereas international brands have been leading in ‘international categories’ such as shampoo and toothpaste, affirmed Lalit Malik, Chief Financial Officer, Dabur India Ltd. “...Indian brands have also been gaining market share even in these highly competitive categories such as toothpaste with their highly differentiated offering,” he added.
The trend within the food industry is totally ‘vocal for local’ when it comes to consumer demand, said Sodhi. “Over 30 years ago, they would have bought a foreign brandbecause the (Indian) brands weren’t there at that time. Along with that, there was a concern of trust on the local bands as far as the manufacturing is concerned. Now, there are a lot of national food brands, and they have developed over the years. More than 60 per cent of the brands in the food industry are local brands unlike personal hygiene, cosmetic, and consumer durable segments,” he explained.
ITC has invested extensively in developing a portfolio of Indian brands, with 25 created from the scratch, said the company’s spokesperson. “Investments in cutting-edge R&D and state-of-the-art manufacturing drive these winning Indian brands,” said the ITC spokesperson.
Meanwhile, campaigns to promote ‘vocal for local’ campaigns have been under way. ITC has been undertaking a ‘proudly Indian campaign’ on social-media platforms. Dabur has also launched a series of advertisements, as well as special videos, as part of the campaign. Dabur has been highlighting the Indian roots of the company and its “135-year-old heritage of caring for every Indian households’ health and well-being”, said Malik.
As for Amul, Sodhi said it has been having similar campaigns since the mid-1990s such as ‘Amul, the Taste of India’. “So, we don’t think we need to shout ‘Made in India’ over the top of our voices. It’s a compilation of everything,” he said.
Not challenge-free
But there have been challenges. When Amul was launched in India in the mid-1950s, the Indian market was dominated by multinational brands that had more money than Amul, Sodhi pointed out.
The government’s efforts to ensure ‘vocal to local’ at least in the food industry have been pretty obvious, according to Sodhi. The government, in its efforts, is trying to make sure they use and promote local produce as much as they can, as well as ban lower-graded ingredients, he said.
The government could consider levying a uniform 5 per cent GST forAyurvedic products and medicines comprising classical, proprietary and OTC products, said Malik. Currently, over 80 per cent of Ayurvedic products fall under the proprietary and OTC categories that attract a GST of 12 per cent, he said.
But why go global? Sodhi has an answer: “For any commercial organisation the brand is its most valuable asset. When a brand sells in the global market, irrespective of where it is produced, sold or ultimately consumed in the world, apart from royalties in technical fees, the owner of the domestic firm enjoys appreciation in the valuation of his brand. This is also a proven MNC strategy. I feel this is also consistent with the PM’s stand of not being a part of the RCEP agreement and opting for a complete make in India policy.”