While globally Artificial Intelligence (AI) usage is increasing exponentially, India, where AI adoption is in overdrive, is not far behind. According to industry estimates, the domestic artificial intelligence market is expected to reach USD $8 billion this year, driven by digital and technology initiatives by the Government of India. As per the publicly reported BCG AI Radar 2025 report released early this year, 71% of companies in India are planning to make significant investments in AI, and 26% of them report that more than one-fourth of their workforce is already trained in AI/GenAI tools. As for the marketing function, as per industry reports, about 40% of companies in India are actively engaged in trials for the adoption of AI in their marketing strategies, while many have already incorporated AI into their marketing activities.
What makes the Fast Moving Consumer Goods (FMCG) sector particularly appropriate for the application of AI is the domain characteristic of intensity of data points generated by millions of customers engaging in multiple transactions within any given time frame, complicated further by the proliferation of SKUs as well as the short consumption cycles. Add to that the vast network of physical selling outlets (best estimates for Kirana stores alone in India put these at between 13 million to 15 million outlets), as well as the growing popularity of quick commerce on online platforms, and the complexity of real-time marketing challenges becomes abundantly apparent. This is a business system that provides the perfect opportunity for the benefits that AI can bring.
Indeed, AI application in the FMCG sector in India is now an essential strategic priority for maintaining competitive differentiation in the rapidly changing technology scenario. ITC Infotech has established its first global AI hub in Kolkata, dedicated to building next-generation AI-led solutions for both its domestic and global customers. According to industry reports, HUL has been able to reduce by a third the time it takes them to sense emerging marketing opportunities, develop product ideas and take them to market. They are by no means alone in this. Companies like Dabur, Emami, and Marico are as active in integrating AI in their marketing activities as their foreign multinational counterparts. What is interesting is that it is not just the established legacy companies with deep pockets and organisational support who are adopting AI in large numbers; it is also new generation Direct-to-Consumer (D2C) companies such as Mamaearth, Lenskart, and Bombay Shaving Company who are extensively using AI to address customer needs and achieve scale efficiencies.
So, where do we see areas for significant AI integration in Marketing in India? The following are some of the major areas identified where AI-powered innovation can provide value:
Effectiveness of new product launches
AI is being used to analyse customer feedback and market trends for improved product development. Kraft Heinz, for example, is reportedly using AI to test consumer response to new packaging and flavour combination alternatives.
Target audience profiling and identification
Indian FMCG firms are leveraging AI to move beyond demographic segmentation, and are uncovering nuanced consumption patterns across diverse linguistic and cultural groups. Industry reports state that Dabur, for example, uses AI-powered WhatsApp bots in local languages to promote products like health and hygiene items.
Augmented Reality (AR)
There are significant opportunities for the use of AR for brand-customer interactivity. HUL is using embedded and interactive on-pack augmented reality-based activation on their Kissan products, which requires scanning a QR code leading to interactive games for children, while imaginatively recounting the brand story.
Focused Advertising and Social Media Messaging
Chumbak, a well-known lifestyle brand, is incorporating AI to amplify its user-generated content initiative, #ChumbakMoments, where customers are encouraged to post photos. This has reportedly resulted in an impressive boost in sales and visibility. This, in turn, is enabling the brand to design customer-relevant messaging.
But for all the benefits that AI can provide there are also undeniable challenges, particularly for its application in India
As for any technological development that can transform the horizon for business, AI also has areas of concern, which are aggravated in India by fragmented and unstructured data systems, and the linguistic and cultural diversity which is further complicated by the urban/rural divergence:
Quality of Data inputs
Rigorous standards for monitoring of data accuracy, bias, timeliness, and relevance escalate data generation costs.
Data Privacy and Ethical Issues
Corporate responsibility in ensuring data privacy and ethical AI use is particularly relevant to the Marketing function, which has the primary role of customer interface in an organisation. Vast numbers of unsuspecting customers in India are inadvertently parting with sensitive personal data.
Diminishing Human Intervention and Insight
Marketers should not lightly surrender their own insights and understanding of the marketplace and customers in favour of complete dependence on AI-generated content and activations, without monitoring and tracking the relevance of these outcomes to our complex socio-economic context.
In conclusion, it is evident that there is an enormous scope for the application of AI for Marketing in the FMCG sector in India. It can be a truly transformative force for empowering the Marketing discipline across other industry verticals in India as well.
Kaveri Narang, Professor of Practice – IQ City United World School of Business, Kolkata
