TRADITIONALLY, FMCG companies have been active in these markets. Hindustan Unilever and ITC
readily come to mind for penetrating into these markets and successfully building their business. The share of the rural market in the total pie has been registering continuous increase.
Increasing rural prosperity...
This became more pronounced thanks to a few major developments: first the consistent high growth of the economy, at around 9 per cent, in which rural India also had a good share. Second is MGNREGA that put lot more money in the hands of the rural population. Yet another welcome development was the continuous and significant growth recorded in agriculture production over the last four years. The focus on building rural infrastructure, especially roads, with liberal funding was another major driver.
Understandably, large corporates that have been focusing on the urban market are turning their attention to rural India. Four of the leading Tata companies – Tata Motors, Tata Chemicals, Tata Teleservices and Titan Industries – jointly made a presentation in Mumbai on their efforts to tap the large potential of this market.
Three’ fold growth in rural incomes
Addressing media persons, Siddhartha Roy, Economic Adviser, Tata Group, pointed to the Indian rural market growing beyond consumer products and agri input materials. He estimates a more than three’ fold growth in rural incomes from the present $ 572 billion to $ 1.8 trillion over the next eight years. Pointing to the increase in real rural wages growing at 7.7 per cent per annum over the last five years, Roy pointed to the opportunities presented by the rural market which he termed as grossly under-penetrated. He said that rural market is flush with funds and is waiting to be tapped.
The Tata Ace and Tata Magic light commercial vehicles have been creating waves. The company recently celebrated this popular vehicle crossing the million in sales. Sandeep Kumar, Head Sales & Marketing) of small, light and intermediate commercial vehicles, Tata Motors pointed to the company introducing a rural marketing initiative called NEEV that helped sell more than 13,000 small LCVs in the last two years. The programme is active in six states and will be expanded to other states by end 2013.