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Rural Market

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Rural Market

February, 2012

Indian Rural Market: Brief Overview

Rural India accounts for almost 70 per cent of the population as the recent Census 2011 indicates that of the 1.21 billion population, 833 million live in rural India.

The clan has been exposed to new communication technologies and a plethora of services which has strengthened its aspirations to become an urbanised society. According to a recent Technopak report, rural Indian economy is highly supported by increasing disposable income, Government initiatives and schemes and favourable demographics. As a result, the rural segment of the Indian economy is growing at a pace of 8-10 per cent per annum and is anticipated to add new consumption of US$ 90 billon-100 billion over 2012-2017 to the current base of US$ 240 billion-250 billion.

Moreover, the growth of rural India is largely attributed by increasing awareness about need of education. According to the ASER (2012) report, private school enrolment in rural India has enhanced by 5.5 per cent points over past six years. The literacy rate has also gone up by 68.91 per cent in rural India.

Retail in Rural India

Rural chains in India are targeting hinterlands in a big way. For many companies, a large section of their revenues is contributed by rural sales. This fact is further making marketers focus their strategies on rural needs and customise their offerings accordingly.

DCM Shriram's rural retail arm Hariyali Kisaan Bazaar (HKB) is planning to open 10 outlets in 2012. It is India's biggest rural retail chain by sales and operates 230 stores across eight states. HKB is also planning to partner with mobile telephone companies to provide farm and commodity advisory services to the farmers.

Indian footwear industry, growing at a compound annual growth rate (CAGR) of about 15 per cent, is anticipated to reach approximately Rs 38,700 crore (US$ 7.87 billion) by 2015 from the current level of around Rs 22,000 crore (US$ 4.48 billion), according to a studyby a leading industrial body. The projected growth is based on larger penetration into tier II and III cities and growing rural market which is making various premium footwear ranges, about 55 per cent of the overall footwear industry.


Higher disposable income in the hands of rural households along with massive advertisements by the market players, would take rural FMCG market from current Rs 87,900 crore (US$ 18 billion) to a market size of over Rs 106, 300 crore (US$ 21.64 billion) by 2012, according to a study by an industrial body. This entails a compounded annual growth rate (CAGR) of 10 per cent in totality for rural and semi-urban areas.

Indian FMCG veteran Dabur is planning to double its rural reach by rolling out its new rural distribution strategy in 2012. Similarly Godrej Consumer (dealing in hair colour, soaps, toiletries and liquid detergent segments) has realised the potential of rural markets as it can notice a vast difference between its sales volume in urban and rural areas.

Similarly, paint companies, which used to rely on cities for growth in sales, are now launching low-cost emulsions to suit needs and preferences of rural consumers.


Automobile makers are targeting Indian consumer market in a big way, in search of potential car buyers. Rural India accounts for almost 35 per cent of the automobile industry sales.

  • While Ford is dedicatedly working with its retail banking partners to target the rural customers, General Motors has laid renewed focus on its rural marketing initiatives
  • Toyota is also planning to strengthen its rural reach and set up additional 25 outlets in semi urban and rural areas in 2012
  • Hyundai offers customised finance schemes to its rural customers and encourages its dealers to open more sales branches in smaller markets. The company already has 340 dealerships and over 1,000 rural sales outlets which it plans to enhance further in 2012