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India’s small towns are the future

Despite saturating growth in the metros, the small-town consumers are starting to splurge. Godrej, a family-owned conglomerate, saw its sales of white goods drop by over a tenth in big cities in the past fiscal year. But sales in towns of less than 100,000 people rose by 19%, and in villages by over 40%. Bajaj, another conglomerate, says small-town and rural sales have risen handily in recent years, to a quarter of its home-appliances business. Sales of motorbikes and mopeds have decelerated more gently than cars, an urban luxury.

The factors encouraging these changes in the non metro consumers are government subsidies, good monsoons, high land prices and a low reliance on credit like Chengalpattu’s shoppers who are mostly farmers benefit from government-fixed floor prices for crops. Poorer shoppers from nearby villages make money from a government scheme that guarantees 100 days of work a year. Rural incomes have also grown more rapidly than urban ones since 2008.

Godrej is pushing even deeper into the hinterland, trying to reach villages with as few as 5,000 people. It is also designing washing machines with manual motors and tiny fridges for homes with unreliable electricity. Foreign firms such as Samsung and Panasonic are following suit.
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