LOGISTICS AND SUPPLY LOGISTICS AND SUPPLY CHAIN IN RURAL INDIA-CHAIN IN RURAL INDIA-

THE OPPORTUNITY THE OPPORTUNITY Amita Marwha

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.

. 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.

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.

LOGISTICS AND SUPPLY LOGISTICS AND SUPPLY CHAIN –THE INDEGENIOUS CHAIN –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.

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 .

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

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;

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

The so-called 4 AsThe so-called 4 As

The more daring MNCs are meeting the consequent challenges of

availability, affordability, acceptability and awareness

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.

The Value Chain - Farm to Factory Gate:

E-CHOUPALE-CHOUPAL

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.

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