Challenges of Doing Business in Rural India for FMCG Companies: An Empirical Study

Abstract

This empirical research examines the challenges faced by fast-moving consumer goods (FMCG) companies operating in rural areas of India. Rural regions present significant opportunities for FMCG firms due to the large population and untapped customer base. However, the unique characteristics of rural India, including low literacy rates, inadequate infrastructure, cultural diversity, and limited access to modern retail channels, pose substantial challenges for companies aiming to establish a strong presence in these areas. The study employs a mixed-methods approach, combining quantitative analysis of data collected from rural customers and merchants with qualitative interviews involving professionals in the FMCG industry. The findings highlight several notable challenges encountered by FMCG businesses in rural India. The report emphasizes the critical role of affordability in rural markets, where income levels often lag behind those in urban areas. To maintain profitability, FMCG companies must offer products at price points that align with the purchasing power of rural consumers.