New Delhi: Persistent low demand in the fast-moving consumer goods (FMCG) sector is causing supply chain congestion, leading to an increase in inventory days, with stocks accumulating at distributors, Business Standard has reported.Some distributors are extending credit terms up to 45 days to retailers, the report said. This is due to the doubling of inventory days, as there’s stress in the rate at which consumers are purchasing goods, distributors told the business daily.Even major brands are experiencing a doubling of inventory days, with some food sector companies seeing up to 60 days.“Festival season demand did not offer any respite this year, and the summer wedding season remained weak, causing a build-up in inventory for the past few months. One has to see how demand plays out after the rabi season,” a distributor based in the east told the newspaper.Another distributor mentioned that, although he did not extend credit to retailers, he opted to sell lower stocks, resulting in a 20% drop in sales.“Retailers have been asking for higher credit days, but I decided to sell lower stock instead,” he said.The case appears to be the same in all parts of the country.In North India, inventory days have more than doubled to around 40 days, which is typically 15 days, the report said.A distributor in North India told the newspaper, “This festival season, demand has been down by 30-35% compared to the average Diwali offtake that we witness. Gift packs, which see high demand during this time, have not sold well, nor have beverages or namkeens (salty snacks), which typically witness a strong pick-up during this time.”Credit to retailers for fast-moving stock-keeping units is at 25–26 days. This typically means retailers clear payments to distributors in seven to eight days. For slow-moving items, credit days have increased to 35-40 days from 15-20 days earlier.However, the inventory pile-up amid lack of demand is in contrast to the reports released by NIQ (formerly known as NielsenIQ) and Bizom, which reported a growth in the FMCG industry, in both rural and urban areas.Business Standard noted this observation, citing the NIQ report, which said that rural markets showed “signs of recovery”, with consumption picking up in the September quarter compared to the year-ago period, while urban markets maintained a “stable rate of consumption growth”.Consumer goods sales (without considering branded commodities) in urban areas grew by 1.6%, while rural areas witnessed a substantial increase of 10.2%, Bizom reported.But the slowdown in the FMCG sector has been confirmed by the big companies.“Obviously there is a slowdown as far as FMCG is concerned. We are seeing a clear slowdown in rural. Despite us continuing to get deeper into rural areas, getting into more villages, etc., we have started to see the rural economy to splutter a bit. However, these are macro issues which companies like us cannot sort out,” Varun Berry, executive vice-chairman and managing director, Britannia Industries Ltd, said during the company’s post earnings call, reported Mint.Marico said that while urban sentiment improved sequentially, instances of higher food inflation and uneven rainfall distribution led to a slower-than-expected pace of recovery in rural demand.Saugata Gupta, Marico MD and CEO, told Mint that rural demand continues to lag urban. “Having said that, when we look at the overall volume growth, demand is not the only factor. There are other things that have happened. There has been some inflation and some down trading and in some of our categories, that down trading can be to smaller brands, or to unbranded goods,” he told the business daily.Hindustan Unilever and Dabur also said that the rural markets are lagging urban,On the other hand, PTI reported a decline in rural consumption due to persistent food inflation and uneven rains in some regions. It reported that the FMCG industry has witnessed a challenging September quarter amid subdued consumer demand.Mint reported that in the second quarter of FY24, some of these companies have done well, while others have not. This has raised doubts about revival in rural demand.Note that a third of consumer goods companies’ revenues are attributed to rural demand, reflecting the condition of the rural economy. And a majority of India’s population lives in rural areas. Therefore, the rural economy’s growth and development are crucial to the overall growth and inclusive development of the country.