Indian rural market attractive for manufacturers

by S. C.

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.

“Fast moving consumer goods sector in rural areas is expected to grow by 40 per cent as against 25 per cent in urban areas. Rising rural incomes, healthy agriculture growth, boost in demand, rising consumerism across India, better penetration of FMCG products in the rural market are contributing to high growth and rapid expansion of the FMCG industry in rural India,” said Mr Sajjan Jindal, President, Assocham.

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.

The 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.

However, the report said, auto firms have begun tapping the countryside. For instance, Maruti Suzuki generates 10 per cent of its sales from rural sales, amounting to 32,000 cars.

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.

by S. C.
14 April 2009 Teatro Naturale International n. 3 Year 1

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