The Pull of Rural Markets

"RURAL MARKET ATTRACTIVE FOR MANUFACTURERS: THE ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY OF INDIA
The rural market is becoming increasingly attractive for manufacturers of consumer products and automobiles, as well as organised retail businesses, according to a report by the Associated Chambers of Commerce and Industry of India. In the report titled ‘The Rise of Rural India’, Assocham said companies in the fast moving consumer goods (FMCG) sector have recorded higher growth in rural market, which has contributed substantially to their bottomlines. India’s FMCG industry is currently estimated at Rs2 lakh crore. Of this, domestic consumption accounts for Rs17,189 crore.
Traditionally, for the auto industry, the rural market has been largely restricted to tractors and two-wheelers, though the penetration of scooters and motorcycles in villages is only 10 per cent, as compared to 25 per cent in urban areas. he reasons for low penetration in the countryside: the high investment involved, poor conditions of rural roads, lack of finance facility and the shortage of service network.
The report said the growing liquidity in rural areas was on account of subsidies to farmers and increase in output of agri-products. Another potential area, Assocham said, was the rural retail market — currently estimated at $112 billion, or around 40 per cent of the $280-billion retail market. "
Source - The Hindu Business Line: April 12, 2009