Government's CAPFs canteens move: No significant impact on FMCG companies, say analysts

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The government's decision to sell only indigenous products in Central Armed Police Forces (CAPFs) canteens may not have significant impact on the fast moving consumer goods (FMCG) industry, according to analysts tracking the sector.

"I don't see any significant impact on FMCG companies. The meaning I took out was “ locally made “ vs “ imported “ For example, for most of the FMCG companies,there is hardly any imported. It is almost  fully sourced in India , made in Indian factories by Indian workers," said an analyst.

Another analyst said largely in CAPFs canteens, essentials like groceries and toiletries are manufactured in India.

Union Home Minister Amit Shah on May 13 announced that all canteens of the Central Armed Police Forces (CAPFs) like the CRPF and the BSF will sell only indigenous products from June 1 to 50 lakh family members of about 10 lakh personnel.

However, there is a confusion over the definition of 'indigenous products'.

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The CAPFs - CRPF, BSF, CISF, ITBP, SSB, NSG and Assam Rifles - canteens together sell products worth about Rs 2,800 crore annually.

In a series of tweets, Shah said the decision has been taken by the Ministry of Home Affairs after Prime Minister Narendra Modi's appeal for opting local products and being self-reliant.

However, analysts said this rule is not applicable for CSDs (Canteen Stores Department).

Track this blog for latest updates on the coronavirus outbreak"The rule is only for CAPFs and not for CSDs (Canteen Stores Department)," the analyst said.

CSDs runs retail chains for the armed forces.

CSDs are only accessible to Army, Navy and Air Force officials and their families.The Department has 34 depots strategically located across India.

CSD retail outlets sell 5,300 products ranging from biscuits and beer to shampoos and cars to 12 million consumers

According to a report in The Times of India report CSD, or Army Canteen, which, incidentally, is a not-for-profit organisation, earned Rs 1,253 crore in FY18.

In FY17, it had earned a net profit of Rs 280 crore on sales of Rs 17,000 crore. However, latest numbers are not available.

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