According to a recent study by the Associated Chambers of Commerce and Industry of India (Assocham), though there is a noticeable slump in demand for fast moving consumer goods (FMCG) in the urban markets, the rising demand in rural areas is attracting manufacturers of consumer products and automobiles, and even organised retail businesses.

The Assocham study titled ‘The Rise of Rural India’ reveals that the global financial meltdown notwithstanding, rural India is being seen as a potential for healthy revenue growth for companies, thanks to a robust demand for products of FMCG, two-wheelers, passenger cars as well as retail sectors.

With a special reference to the FMCG sector, the study noted that a number of FMCG firms, including DCM and ITC, have been witnessing better product demand and higher growth rate in the rural markets vis-à-vis the urban markets.

Commenting on the situation, Assocham president Sajjan Jindal said: “FMCG sector in rural areas is expected to grow by 40 percent as against 25 percent in urban areas.”  

Mentioning the reasons for the rise in rural demand, Jindal said: “Rising rural incomes, healthy agriculture growth, boost in demand, rising consumerism across India, better penetration of FMCG products in the rural market are contributing to high growth and rapid expansion of the FMCG industry in rural India.”