Demand for Consumer Durables in Rural Areas

India’s rural consumer durable market will witness an annual growth of 40 per cent in the next fiscal 2011-12, as against the current growth rate of 30 per cent owing to the change in lifestyle and higher disposable income of rural India which has fascinated the consumer durable market according to a study “Rise of Consumer Durables in Rural India” undertaken by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Around 35 per cent of the total sales of consumer durable items come from rural and semi-urban markets, which will grow by 40 to 45 per cent in the near future. The consumer durable industry is growing at a fast pace and sees a strong demand in the coming period with the growing affordability of products as well as general buoyancy in the economy”, According to ASSOCHAM. The market for consumer durables is estimated at Rs. 300 billion and is expected to reach Rs. 00 billion by 2015. The urban consumer durables market is growing at an annual rate of nine to 12 per cent, the rural durables market is growing at 30 per cent annually. Some high-growth categories within this segment include TVs (Ctv’s,LCD’s,LEDs),DVD player’s,Refrigerator’s,Washing Machines, & Air Conditioner’s. The rural market is growing faster than the urban market and the urban market has now largely become a product replacement market.

The consumer durables industry in rural and semi-urban areas has witnessed a considerable change during the last few years. The consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts and stiff competition in the market to attract the growing middle class.. With being the second fastest growing economy with a rate of more than 9 per cent, with a huge consumer class nearly 70 per cent in rural areas, consumer durables have emerged as one of the fastest growing industries in especially in rural .

Now the consumer durable industry is paying more attention to attract rural community by promoting their products and services in their local languages. The consumer durable sector which contributes around 8 per cent in the Index of Industrial Production (IIP) and which provides jobs to professionals, skilled, semi skilled and unskilled workers, particularly women in the rural and semi-urban areas every year.

The segment improves the quality of life of people by providing entertainment / information / education / comfort and also helps to reduce daily chores. But the importance of the sector in national economy remains unnoticed. The penetration level of consumer durables is about 5 to 7 per cent and for deeper penetration in the rural sector, the industry need to create proper channels and inform the community about the products through local language advertising as well as other tools such as local exhibitions and mobile vans to tap the rural consumers.

On the other side government has to focus on rural economy with greater fiscal incentives and generate more rural employment schemes. Rising disposable income and declining prices of durables have, resulted in increased volumes. An increase in disposable income is aided by an increase in the number of both double-income and nuclear families.

As per study revealed that in the coming five years it would be a new era for rural , by 2015 it is expected that every village will be connected by an all weather road, every village will get the internet connectivity and almost every home will have electricity and possess a Colour Tv’s. This significant improvement in rural infrastructure coupled with agriculture reforms already under way. By this the industry expects rural market to Grow at faster rate. This built up will lead to an explosion in demand the way it happened in the urban markets in the mid 90s.