By 2025, India will triple its income level and will become the fifth largest consumer market, climbing from its current position at 12. A lot of this wealth will be created in the urban areas but even the rural households will benefit. The real annual real income for rural households will move from 2.8 per cent in the past two decades to 3.6 per cent in the next two. This was stated in a report by McKinsey & Company named ‘The ‘Bird of Gold’: The Rise of India’s Consumer Market’.
India's middle-class is expected to increase by ten times to around 583 million, while the income levels will triple by 2025, as India reaches the fifth largest consumer market in the world level, report stated.
The Indian rural market is expected to touch US$ 100 billion, more than ten-fold, in the next 15 years, according to market research firm, The Nielsen Company. The rural market is currently estimated to be worth approximately US$ 9 billion in consumer spending in the fast moving consumer goods (FMCG) space per annum.
The study also highlighted that rural India now accounts for more than half of sales in some of the largest FMCG categories.
Indian FMCG and retail sector companies are providing innovative mobile technology and tablet personal computers for field representatives to reach out to rural India.
The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', by an industry body.
Rural India consumers hold a major share in many categories. Rural India buys 46 per cent of all soft drinks, 49 per cent of motorcycles and 59 per cent of cigarettes and almost 11 per cent of the rural women use lipstick. This was found by MART, a New Delhi-based research organisation that offers rural solutions to the corporate world.
Big retailers are focusing on the rural market. ‘Aadhar’, the Future Group and Godrej Agrovet's joint venture (JV) in rural retailing will be revamped, while Rajkot based Champion Agro Ltd is planning to open 400 agri-retail outlets across Gujarat. ACIL Cotton Industries, a company based in Vadodara, has launched 40 ACIL Krishi Stores across Gujarat.
The rural consumer durables markets’ annual growth rate is 30 per cent, according to a study by an industry body. The market will grow up to 45 per cent in rural and semi-urban India by 2011, due to improved income and better living standards among rural people.
The total size of the consumer durables market stands at US$ 6.72 billion and will reach US$ 11.2 billion by 2015. Mobile phones, LED televisions and music systems, which include fancy items such as the iPod, are some major growth drivers.
Lighting solutions company BPL Techno Vision has launched its rechargeable light emitting diode (LED) lantern 'BPL Chirag' for the domestic rural market. The product has been launched in Uttar Pradesh (UP) in the first phase due to its large geography and rural household base.
Maruti Suzuki's share of rural sales has increased from 3.5 per cent to 17 per cent in the last three years.
Mahindra & Mahindra (M&M) is now selling more Scorpios in rural and semi-urban markets. Scorpio sales have increased from 35 per cent to 50 per cent in the last two years.
Toyota Kirloskar Motor (TKM), in which Japan's Toyota Motor Corp holds an 89 per cent controlling stake, is planning to sell 40 per cent of its cars in rural markets in India. According to Hiroshi Nakagawa, Managing Director, TKM, "We are aggressively expanding our dealership footprint in India and quite a significant portion of this will be in country's heartland.
Yamaha plans to double the number of its sales outlets in India in the next five years to tap the growing demand in villages as economic growth boosts incomes. India Yamaha Motor Pvt. may increase showrooms to 2,000, mostly in small towns and rural hubs, according to Koji Arai, director and chief sales officer. The company is refurbishing some of the existing outlets in small towns and rural hubs and adding new ones called Yamaha Bike Corners, organising free motorcycle service camps and test rides.
Tata Motors is also making efforts to sell its pick up truck Ace in rural markets. It has already opened 600 small outlets for the Ace in rural and semi-urban markets. It has also tied up with 117 public sectors, gramin (rural) and co-operative banks to help small entrepreneurs buy the vehicle.