New startups are getting registered everyday and that too in lots. But the question here is how many of them are for the improvement of rural India or how many of them are actually originating from the villages? The answer is quite difficult, isn’t it! Being relatively unexplored to a great extent, rural India presents a wide range of opportunities to start and expand any business. But there are several challenges that are not allowing the upcoming startups to make the best use of it. Let us explore the reasons why the scenario happens to be like this despite a major population dwelling in rural India.
Lack of infrastructure in rural India
The last mile delivery has always been a problem for the e-commerce giants. There have been collaborations and several other efforts to change the game play and to enter the rural zone but the penetration has occurred to a small extent only. You can read about the efforts of logistics and e-commerce companies in details here.
The use of postal services by mobile operators to penetrate scratch cards to the villages has also proved to be quite effective. This has resulted in a wide reach and may prove to be an innovative solution for startups as well. The Indian Postal service is the biggest in the world and most of its branches are present in rural India which can be a huge advantage if utilized in the proper way and by keeping all the strategies in mind. Also, there is an urging need for individuals in rural India to come up with startup ideas because they can provide the solution in the best possible way.
Banking has not been able to penetrate completely into rural India till now. With a dearth of proper internet connectivity and lack of awareness, online money transfer is still an unknown entity to the majority of the population dwelling in the villages. Cash collection is very messy and long process while non-cash collections are rather quick. This doesn’t allow many e-commerce giants to facilitate COD (Cash On Delivery) in the rural areas and also in the small towns. Collaboration with MFIs (Micro Finance Institutions)can be a solution but again this is not the only way which can bind the whole system together and can help to solve the last mile challenges.
Problem to Scale up operations
India has a vast range of demographics. So, setting up operations and scaling it up at pan-India level is very challenging with limited funds in hand. There are numerous hurdles that crop up starting from political grudges to downright local factors. Scalability is not always just mere number of downloads. On-ground scalability is much more than that. Startups need a proper strategy and may need to collaborate with various agencies to reach and scale up operations in the areas they think needs improvement.
Poverty in rural India
The lifestyle in the rural areas has hardly changed over the years. The rate of inflation has never kept a balance with the rate of increase of wages. This has in turn resulted in acute poverty in the villages. Only a small percentage, that is, 2–3% of the Indian population belongs to the elite class. So, if a person doesn’t have enough money to eat even, will he ever dare thinking about riding a car? The answer is an obvious no. Most of the startups are providing luxuries to the Indian customers and can’t be availed by the poverty stricken section of the society. Hence poverty is a big problem which has compressed the targeted audience greatly for startups.
Lack of need in rural India
Imagine launching Ola/Uber in a small village. Will it work? Absolutely not. Neither the distance is so huge that people will need an Ola nor do they have money to avail such facilities. Similarly, there are several startups which will never work unless development occurs at a full swing in rural India. India’s rural population is purely living on agriculture and startups with solutions to agricultural problems can definitely prosper here. So, the first requirement is to develop the right atmosphere in the rural areas and improve the literacy rate. Otherwise it is likely for startups to fail drastically as people in rural areas don’t need them at all.
I don’t intend to say that rural India don’t hold potential for starting up. Most of them just indicate the challenges which if solved gradually taking one at a time can prove to provide a great market. The rural population is the major one and hence volume is not a problem there. It is just the lack of awareness about business and entrepreneurship that needs to be spread to change the world around us.
I would definitely like to know your views on this. Let me know by commenting below.
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