The policy is governed by the foreign direct investment (FDI) regulations, and this week authorities again confirmed that the policy governing the sector will continue to only concern food.
Recent lobbying by retailers had led the Food Processing Industries Minister Harsimrat Kaur Badal to indicate that the ministry would soon be willing to allow personal care products.
But another nameless government official this week stated in an interview with Economic Times of India that: “The policy is only for food products manufactured in India. There is no provision for personal care or non-food items."
An opportunity for retail to expand and fuel personal care growth
Although the Indian market for cosmetics and personal care is fast growing, particularly in urban areas, retailers believe they could be fuelling even higher levels of growth if food retailers were able to include beauty products in their aisles, like in many supermarkets and hypermarkets worldwide.
Major international retailers such as Walmart have expressed interest in entering the Indian retail market as a means of boosting their international portfolios and tapping into the enormous retail growth in the country.
However, these multinational retailers will undoubtedly be more interested in the multichannel concepts that have characterised their stores worldwide, particularly as the food sector traditionally offers some of the lowest profit margins, while the margins on cosmetics and personal care products are usually much higher.
Double-digit growth across many beauty categories
Growth in the country’s cosmetics and personal care market is being fuelled mainly by a burgeoning middle class that is experimenting with increasingly sophisticated products, alongside a trickle-down effect that is seeing high-demand in the mass market as consumers expand their personal care regimes to include new products.
According to market research company Mintel, there will be double-digit gains across most beauty and personal care categories in the course of the next five years, pointing to opportunities across the board.
Mintel estimates that the market for cosmetics and personal care was worth an estimated $12.7bn in 2015 and will rise to $13.7bn by the end of 2016, an annual increase of almost 8.0%, with highlights for high category growth likely to be body care, colour cosmetics, facial care and shampoo and conditioners.