Fast moving consumer goods (FMCG) worth $3.5 billion are expected to be sold in rural India by the end of this year, says the Associated Chambers of Commerce and Industry of India (Assocham).
The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soaps, blades, tea, salt and toothpowder.
Almost 70 per cent of rural households buy toilet-soaps and 38 per cent two-wheelers, Assocham's study based on feedback from leading players of the sectors said.
The FMCG segment, in value terms, is expected to be over $18 billion as on December 31, 2007, of which the rural sector would comprise of a little more than one-fifth, the chamber highlighted.
In 2006, the total market size of the FMCG segment was estimated to be $15 billion, out of which the rural segment stood at $2 billion.
"The factors responsible for increased market penetration in rural FMCG sector includes higher consumption patterns of rural population for products such as consumer durables, which include refrigerators, TV sets, electrical appliances as rural India is getting connected with power facilities, personal care products, toiletries, soaps and soft drinks," said Assocham president Venugopal N Dhoot.
Highlighting other major reasons behind growth in the rural sector, Dhoot said affordable cost structure as per rural requirements also has contributed to galloping sales, which increased by 30 per cent in the first 10 months of the year.
The rural population in India is three times that of urban areas and comprises approximately 128 million households. Thus, increasing affluence, good monsoon, and increased agricultural output have rural India buying like never before.