The Hindu Business Line : `Cos must create markets for products in rural areas'

Companies must look at urban and rural India as a unified mass (unlike the present urban-rural divide) as this makes business sense, according to Mr R. Seshasayee, President, Confederation of Indian Industry (CII), and Managing Director of Ashok Leyland.

"We tend to think that rural aspirations are different from urban aspirations. But this is not so," he said, speaking at a seminar on `Rural empowerment - Entrepreneurial skills development' organised by CII - southern region.

"Growth will come only from rural markets. By creating a market for products in rural areas, we can truly empower the rural masses," he said.

To nurture business in rural areas, credit-lending institutions should not limit credit based on assets like land. Instead, credit must be given to a commercially viable idea, he said.

Dr Nachiket Mor, Deputy Managing Director, ICICI Bank, said it was expensive to serve the poor. "The transaction cost for loans ranging between Rs 10,000 and Rs 25,000 is about 20 per cent of the loan value. This makes it difficult for banks to set up rural branches," he said.

To help small and medium enterprises (SMEs) scale up business, ICICI Bank has created a trust to fund intermediary companies which will in turn help in developing markets for SMEs to sell their products.

SMEs lack new skills to scale up business, said Dr Mor. He cited the example of how companies often did not understand equity sharing. They do not disclose profits because they know that profits have to be shared, he said. He emphasised on the need for a monitoring body to track the progress of SMEs.

CII and Hand-in - Hand, an NGO, jointly released a manual to help SMEs scale up their business. The manual covers areas such as skill training and mentoring besides providing business-related sections such as accounting and maintaining records. Released in English and Tamil, the manual is priced at Rs 600 and Rs 750 respectively.

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