RURAL INDIA The Indian rural consumer lives in over 600,000 villages across the countryand they account

for over 70% of the population of the country. For severalproduct categories, rural markets account for well over 60 per cent of thenational demand. While the rural consumer is generally seen as lessaffluent than his urban cousin, things are changing in rural India over thelast ten years. While in 1998-99 over 83% of rural households fell in thelower and lower middle classes, the number has fallen to 70% in 2006-07;the comparative fall for urban India is from 53% to 27% [NCAER data].And if experts are to be believed, the number is set to fall at a rapid rateover the next 20 years. The consumer durables market in India was estimated to be around US$4.5 billion in 2006-07. The industry is set for sustained growth over a longterm, fuelled by favorable consumer demographics, overall growth inservices and industrial sectors. The rapid growth in this industry has madeit an attractive investment option as the urban and rural markets in Indiacontinues to grow at an annual rate of 7 to 10 per cent and 25 per cent,respectively. India is also emerging as a global base for handsets. India produced nearly31 million mobile phones in 2006 worth about US$ 5 billion. This segmentmade the largest contribution to overall electronics production revenueand the total available market for semiconductors. Starting on an alreadystrong base, over six million users are being added every month and arebuilding a large local market for mobile manufacturers. Increasedconsumer demand is also expected to boost the white goods segment to achieve production levels of US$ 5.09 billion by the end of 2007-08, against US$ 4.54 billion in 2006-07, with a growth rate of 12.5 per cent. Television reach in rural India has moved up from 13% in 1993 to 26% in2002; the urban reach of TV has moved up from 49% to 66% in the sameperiod. The drivers for demand have been the improvement in life styleand higher aspirations of urban middle class and an increase in disposableincomes. As a result, brands account for 10 per cent of the total consumergoods market in India, with organized retailing accounting for around twoper cent of the total industry.