Rural India Becomes The Star of India’s Growth Story, Set To Drive Retail, FMCG Sales, Says Report

Proving to be a glittering episode in the Indian Consumption scene, the demand outlook for the rural household remains robust, says Financial Express quoting a report by Deloitte and FICCI.

Rural households account for 68 per cent of the country’s population.

Multi-national companies have lucrative opportunities in rural India in the backdrop of a growing economy and favourable conditions.

Rural households contribute almost 50 per cent to the GDP, 40 per cent to FMCG sales, 50 per cent to two-wheeler sales and constitute 30 per cent four-wheeler and 45 per cent telecom contribution, the report said.

The retail market in India is projected to hit $1.2 trillion in the next 5-8 years while modern retail is expanding its footprint across India and is expected to reach 25 per cent of total retail sales from 10 per cent, notes the report.

Along with the growth in retail sector, e-commerce is expected to double its share to 10-12 per cent of total retail sales in the next 5-8 years.

“Increased technology intervention, especially in retail have made consumers’ shopping journey more experiential. Brands are responding to this evolution, by making the consumers’ journey less transactional and are leveraging omni-channel ways to enable their purchases,” noted the report.

Per capita income is expected to increase 10.2 per cent to Rs 2,66,500 by 2025, discretionary spending is also expected to grow to 45 per cent in 2025, from 35 per cent presently. Report also suggests a massive rise in demand for white goods. Households in India have evolved from typically consisting of 4-5 major consumer appliances during the 1990s to nearly 12-15 appliances today.

A steady growth rate of 7 per cent coupled with favourable demographic factors in the country are expected to drive retail growth, CPG (consumer packaged goods) and e-commerce industries, said Rajat Wahi, partner, Deloitte India, as quoted by Financial Express.