This document discusses the opportunities in logistics and supply chains in rural India. It notes that rural India has a large population and consuming class, accounting for close to 70% of users of some consumer products. While the rural market is alluring due to its size, it also presents challenges like low incomes, seasonality, and lack of infrastructure. Some companies are addressing challenges of availability, affordability, acceptability and awareness in rural markets. It provides examples of companies innovating their supply chains and distribution networks to better serve rural consumers.

1. LOGISTICS AND SUPPLYLOGISTICS AND SUPPLY
CHAIN IN RURAL INDIA-CHAIN IN RURAL INDIA-
THE OPPORTUNITYTHE OPPORTUNITY
Amita Marwha

2. India with a GDP of about Rs 31,297
billion is estimated to spend 13 per cent of
its GDP on logistics, creating an industry
size of around Rs. 4,068 billion.
The sector has been witnessing double
digit year-on-year growth rate since 2002
and is expected to be more than USD 120
billion (Rs. 5,400 billion approx.) by 2015.

3. . With 128 million households, the rural
population is nearly three times the
urban.
Rural India has a large consuming class
with 41 per cent of India's middle-class
and 58 per cent of the total disposable
income.

4. The importance of the rural market for
some FMCG and durable marketers is
underlined by the fact that the rural
market accounts for close to 70 per cent
of toilet-soap users and 38 per cent of all
two-wheeler purchased.
 The rural market accounts for half the
total market for TV sets, fans, pressure
cookers, bicycles, washing soap, blades,
tea, salt and toothpowder,
What is more, the rural market for FMCG
products is growing much faster than the
urban counterpart.

5. LOGISTICS AND SUPPLYLOGISTICS AND SUPPLY
CHAIN –THE INDEGENIOUSCHAIN –THE INDEGENIOUS
SUCEESS STORYSUCEESS STORY
The story of India’s perishable foods
business has long been one of innovations.
While Amul, via the Gujarat Co-Operative
Milk Marketing Federation, has already
made a success out of its supply chain,
there are many others in the milk and
milk-based products that are now trying
out various options.

6.  A look through the annual reports of 34
listed food products companies throws up
some interesting ideas, of leveraging the
logistics of milk procurement for reverse
logistics: using the system to drive
product penetration into rural markets.
For example Heritage Foods (HFIL), with
sales of Rs 245 crore from its liquid milk
business .

7. Reasons for improvement of business
in rural area
* Socio-economic changes (lifestyle,
habits and tastes, economic status)
* Literacy level (25% before
independence – more than 65% in
2001)
* Infrastructure facilities (roads,
electricity, media)
* Increase in income
* Increase in expectations

8. THE HURDLESTHE HURDLES
The rural market may be alluring but it is
not without its problems:
 Low per capita disposable incomes that is
half the urban disposable income;
 large number of daily wage earners,
acute dependence on the vagaries of the
monsoon;
seasonal consumption linked to harvests
and festivals and special occasions;

9. poor roads; power problems; and
inaccessibility to conventional advertising
media.

10. The so-called 4 AsThe so-called 4 As
The more daring MNCs are meeting the
consequent challenges of
availability,
affordability,
acceptability and
awareness

11. The Big Picture:The Big Picture:
The Big Picture:
ITC's Agri Business Division, one of India's
largest exporters of agricultural
commodities, has conceived e-Choupal as
a more efficient supply chain aimed at
delivering value to its customers around
the world on a sustainable basis.

12. The Value Chain - Farm to Factory
Gate:

13. E-CHOUPALE-CHOUPAL

14. Optimizing the supply chain function is a
formidable task and more so in the Indian
context where the supply chain caters to
over a billion people and spreads across
several hundred cities.

15. THANK YOU