The demand in rural areas are growing higher in some sectors - like fast moving consumer goods (FMCG) sector, automobile and organised retail sector - in comparison to urban areas despite the global meltdown, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said.
Releasing a report titled ‘The Rise of Rural India’ Tuesday, ASSOCHAM stated that though the demands in urban areas were deteriorating due to worsening global economic crisis, some sectors like FMCG, automobile and retail sectors were budding higher in rustic areas on the back of rising rural income with increasing agricultural growth and better penetration by companies into rural market.
The FMCG sector in rural areas was expected to grow by 40 percent in comparison to 25 percent in urban areas, ASSOCHAM said in the report by adding that several FMCG firms like DCM, ITC have recorded higher growth rate in rural market.
The total size of FMCG industry in India is estimated to Rs 2,00,000 crore, including the domestic market size of Rs 1,71,189 crore, while the total retail market is around Rs 14,00,000 crore, out of which 40% of total market translating into Rs 22,40,000 crore are in rural areas, the industry body estimates.
ASSOCHAM also expressed hope that the retail market in rural areas would be doubled in next four to five years in 10,000 villages out of 60,000 villages which have access to organised retail services.
The automobile market that was earlier restricted to only tractors and motorcycles in rural areas, are now swelling in four wheeler commercial and personal vehicle segments.
Earlier, the automobile companies were not penetrating rural markets due to lower village income, poor conditions of rural roads, lack of finance facility and deficiency of service network, but after saturation of the urban market the automobile firms moved to countrywide market.
Maruti Suzuki, the frontrunner car seller, which has registered remarkable growth in rural markets, has also nudged the other automakers to move towards villages.
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