The most common shock for first-time FMCG founders is how much of their MRP disappears before the product even reaches a customer. Set an MRP of ₹100, and the trade chain — distributor, stockist, retailer — typically consumes 25–35% of it before you see a rupee. This is not negotiable in the early years. It's the cost of physical distribution in India.
Here's how those margins are structured and what actually drives them.
Indian FMCG margins are calculated as a percentage of MRP — not as a percentage of the selling price to the trade partner. This is the standard and it matters because it means every participant in the chain calculates their margin from the same reference point: what the consumer pays at shelf.
A distributor getting 10% margin on a ₹100 MRP product gets ₹10 regardless of what price he pays you. You invoice him at ₹72 (after your margin + retailer margin + GST), he invoices the retailer at ₹82 (his cost + his margin), and the retailer sells at ₹100 MRP.
| Channel | Distributor/Platform | Retailer/End Point | Total Trade Deduction |
|---|---|---|---|
| General trade (kirana) | 8–12% of MRP | 15–22% of MRP | 23–34% of MRP |
| Modern trade (D-Mart, supermarkets) | 12–18% of MRP | Included above | 22–30% of MRP + possible listing fees |
| Quick commerce (Zepto, Blinkit, Instamart) | 15–22% commission | Included above | 15–22% of MRP + logistics |
| Amazon/Flipkart marketplace | 18–28% fees | Included above | 18–28% of selling price + courier |
| Own D2C website | Payment gateway ~2% | None | 2% + ₹50–80 logistics per order |
These are directional ranges. The actual number varies significantly by category, brand strength, region, and negotiating position. A new brand with no sales history will get less favourable terms than an established one.
In many Indian markets — especially smaller towns and states with complex geography — there's an additional layer between manufacturer and distributor: the super-stockist (C&F agent or carrying and forwarding agent). They typically take 3–5% of MRP on top of the distributor margin and handle bulk storage and local logistics. If your product goes through a super-stockist, add this to your trade cost calculation.
Metro markets (Mumbai, Delhi, Bengaluru) often don't need a super-stockist layer. Tier-2 and Tier-3 markets frequently do.
Modern trade accounts — D-Mart, Reliance Fresh, Spencer's, BigBasket B2B — are attractive because of volume and brand visibility. The trade-off is more demanding margin terms and additional costs that don't show up in the headline margin number.
Modern trade buyers often require:
Net effective margin after all modern trade deductions is often no better — and sometimes worse — than general trade, despite higher volumes.
Three things move the needle on what margin you're expected to give:
Brand pull: If consumers ask for your product by name, the retailer needs you more than you need them. Brand pull is the single most powerful lever for margin negotiation.
Category velocity: Products that sell fast are more valuable to a retailer's shelf space economics. A product with high inventory turns needs less margin incentive to stock.
Exclusivity: If you're giving a distributor exclusive territory, they'll often accept a lower margin in exchange for the volume potential.
₹100 MRP snack, 12% GST, general trade with 10% distributor and 18% retailer margin:
From ₹61.29 you still need to subtract COGS, primary and secondary packaging, freight to the distributor, and brand overheads. If your all-in COGS is ₹45, you're left with ₹16.29 per unit — 16.3% net margin before any marketing spend. That's workable, but tight.
Enter your MRP, GST rate, and trade margins to see the exact manufacturer net realization for your product.
Open Margin Calculator →