Rural FMCG market to outpace urban: Assocham

Fuelled by growing fascination of youth towards the fast moving consumer goods (FMCG) and rising income levels, the FMCG market in rural and semi-urban parts is likely to grow at a faster pace in the next three years while the urban areas may register a drop in growth.

"The rural market contributes 52% to the total FMCG market in India, which is expected to grow by 10% by 2010, driven by 180 million young population," an Assocham statement said.

The semi-urban market is expected to grow by 6% in the next three years and contribute 21% to the country's total market, up from 19%.

In chamber's view, in urban India the market size is estimated at 29% which is likely to come down to 22% by 2010 as consumers are becoming more health conscious and shift away towards adoption of organic products.

As per industry estimates, the total size of domestic FMCG market in volume terms is $15 billion, of which $7.9 billion come from rural areas and $2.85 billion from semi-urban markets while metros and other cities contribute $4.2 billion.

"The government's permission to 100% FDI in FMCG will further fuel the growth in rural and semi-urban India," V N Dhoot, president, Assocham said.