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Monday, May 12, 2014

Challenges for Entrepreneurship in Rural India

India lives in its villages. And India’s most important characteristic on which its strength rests is ‘unity in diversity’.  We have grown with this fact.  The belief that people residing in urban areas are better off than their counterparts toiling in the villages is highly relative.  It really depends as to what really one wants to look at, in tangible form or intangible form. Whatever the case be, it is evident from the practices that the back end support to industrial power houses is provided by this strong rural working population, working hard through their lives.
The thinking that standard of living in the villages in tangible terms is poor or relatively bad, is obscure.  It has given birth to an idea of focusing on developing better infrastructure in the rural areas.  It is also necessitated out of issues related to migration (from rural areas to urban areas), which is posing a great challenge to the urban development departments of the respective governments to reconsider their public policy concentration and to move towards rural areas.
The same phenomenon is observed for business houses so far as product focus, innovation, and its designing is concerned.  The planning of the government has resulted in flow of capital and circulation of money in the rural areas.  It has resulted in improving the purchasing power of rural mass. On the other side, the business houses have recognized a huge potential of selling their products and services to rural population, which comprise of around 70% of India’s total population, nearing 850 million citizens.  Though in many segments the requirement of rural folk is similar, however their buying behavior is different than urban buyers.  This is one kind of diversity. 
Another kind of diversity is cultural, geographical and regional differences in rural aspirations as to their need for different kind of products and services.  The entrepreneur of the future has to think in these lines and get into a mode of catering through specific products rather than generic ones to sustain in this market space.
The companies like Hindustan Unilever, Proctor & Gamble, ITC, Godrej, Coca Cola, Pepsi, etc have already entered this market space. While the marketers of big corporations are busy studying the psychology of rural households in order to design and develop appropriate products and services to capitalize on this huge opportunity, young budding entrepreneurs are trying their hand on this turf through adapting innovation in their approach and delivery.
Around 60 percent of the villages have more than 1000 residents whereas the number of villages having more than 10000 residents is just around 1% of total number of villages.  This data is important for an entrepreneur who wants to operate in the economies of scale and scope through getting into the specifics. There is still huge opportunity for fulfilling basic needs of the rural population.  The spectrum of basic needs is getting beyond roti, kapda aur makaan (fooding, clothing & Shelter), and spreading towards padai, dawai, and safai (education, medication & sanitation).  Basic amenities and infrastructure is another area where investments, entrepreneurship and innovation are called for.  The scope is wide for interested entrepreneur to develop products and services in these areas. Entrepreneurs have a great challenge in making the rural folk aware about different kind of products to suit their needs through which they are convinced of deriving perceived value.  Sustainable business models are needed to be developed so that it results in win-win for both, users and providers.
A young team led by Abhinav Kumar has designed a truck-like vehicle in the name of Saavaj (lion in Gujarati) through a startup company named Evomo.  This rural utility vehicle (RUV) is designed to replace risky and unscientific vehicles in operation in different parts of rural India.  Rural India fully depends on road transport for its daily requirements and to reach their products to the adjacent market. The overdependence on road transport and use of risky vehicles for carrying the produce from and to the villages provided an opportunity to these young entrepreneurs who are introducing this vehicle in Gujarat to start with.  This RUV can take on any rough terrain with a top speed of 50-60 km per hour and be used for people as well as goods apart from performing some of the agricultural ancillaries like pumping water.  Evomo claims that it would reduce transportation cost by around 30% and there would be drastic fall in road accidents through the use of this RUV.  If everything goes as per plan of this team, it should hit Indian rural roads by the end of 2014.  Whether this low cost, workshop made Saavaj shall be able to replace jugaads or not, only time shall be able to tell.  Yet the effort and enthusiasm which is going in the process has surely taught several lessons and in one or the other way shall pave path for future innovations to cater to the need of rural road transport which is a great differentiator.
Yanasaundary is yet another example of a young concerned entrepreneur who started a venture with one of her friends to provide alternate energy through solar power in the village areas of Tamilnadu where electricity shortage was the order of the day.  An electronic engineer herself, she started a solar panel company in Kanchipuram which at present employs just 8 persons and manufactures solar panels (for different uses), lamps, and power inverters.

Providing safe drinking water, improving the infrastructure for schools and primary health centres, developing networks of farmers for marketing their products, helping farmers to get away from the clutches of the middlemen, crop insurance, developing customized banking solutions, improving road transport conditions, provision of sufficient electricity, reaching out to remote areas with mobile medical vans and attending emergencies, awareness about hygiene issues, provision of clean latrines, are some such areas where social entrepreneurship needs to be focused.  Though some of the big companies have already taken initiatives in this direction, yet, a lot more is required to be done in order to develop the villages.

(published in SME World, May 2014)