Introduction

Rural Non-Farm Sector (RNFS) plays an important role in the process of economic growth. Almost the entire traditional industry and even some portion of the modern Small Scale Industries (SSIs) forms part of the RNFS. Thus, rural enterprises represent a vast heterogeneous collection of business entities encompassing within it's old artisans working in houses, small workshops in the agricultural sector, agro-processing units using farm surplus, units producing simple consumer items for the rural populace, ancillary units producing parts and subassemblies, handlooms, handicrafts, coir and sericulture, service activities etc., In India, the role of RNFS has always been recognized as an integral part of the development process of the country. These were conceptualized to be cottage and small scale industries, as being important from the point of view of national development since the beginning of the Independent India. This would be clear from the treatment this sector was given by the Industrial Policy Resolution (1948).

RNFS is important

The Industrial Policy Resolution (6th April, 1948) emphasized that, "cottage and small scale industries have a very important role in the national economy, offering as they do scope for individual, village or cooperative enterprises. These industries are particularly suited for better utilization of local resources and for the achievement of local self-sufficiency in respect of certain types of essential consumer goods like food, clothing and agricultural implements. The healthy expansion of these industries depends upon a number of factors like the provision of raw materials, cheap power, technical guidance, marketing of their produce, and safeguards against intensive competition from the large-scale manufacture as well as the education of the workers in the use of best available techniques". They also provide immediate large scale employment, ensure more equitable distribution of national income and facilitate an effective mobilization of resources of capital and skills and prevent the unplanned urbanization and its consequences. The state has been following a policy of supporting cottage, village and small scale industries by restricting the volume of production in the large scale sector, by differential taxation or by direct subsidies. However, the aim of the said policy was to ensure that the decentralised sector acquires sufficient vitality to be self-supporting and it's development is integrated with that of large scale industry. Therefore, the State will concentrate on measures, designed to improve the competitive strength of village and small scale sector (Rama Rao, 1985).

In the post-reforms period marked by the opening up of the economy and increasing alliance between the large and small scale segments of the domestic market, there was a paradigm shift in the concept of small scale industries/RNFS. This has brought to the fore the issues of speed, customer preference, quality certification, technology upgradation, cost reduction, professional learning, innovation and promotion.

Market is the real test 

Who are Market is the ultimate yard-stick with which the sustainability of any economic activity is tested. No enterprise can plead for excuse if it can not pass this test. During the last four decades the rural market in the country has grown highly complex due to a wide range of influencing factors; technological advancement and increase in the managerial competence of the competitors being the two most important in this regard. When markets become complex, they throw out new opportunities as well as challenges. For the rural non-farm sector these opportunities are in the form of improved technology, higher productivity, potential new product lines and new market segments, while the challenges are intense competition from larger and more efficient enterprises and ever increasing expectations of consumers, trained to be brand-conscious. The behaviour of markets being highly dynamic, entrepreneurs have come under immense pressure to constantly review their market strategies and skills. Enterprises which falter on this count are compelled to vacate the markets to the aggressive players. When enterprises fail to fulfil this minimum need, no amount of non-marketing support which could be in terms of subsidised credit, explicit purchase preference for their products by government and its institutions, provision of raw materials at less than market prices, organisational and managerial assistance, technology transfer and skill up-gradationcan help the enterprises to stay in the market. In the back drop of the on-going economic reforms their retention with such non-market external support has become highly difficult. All the same, rural non-farm sector can not be ignored in terms of policy since, it alone is the employer of the last resort to an increasing proportion of rural work force which (i) fails to eke out gainful employment in the already over crowded farm sector, and (ii) feels unwanted by the capital intensive, high-tech and labour displacing organised sector (Gangappa, Narayana and Purushotham, 1998).

Market for rural products 

An attempt is being made here to study the market environment for rural enterprises. This could best be done by learning from a study reported by Gangappa, Narayana and Purushotham (1998). In this study 45 micro-enterprises in sub-sectors such as food processing, agro-processing, construction material, handicrafts, textiles, fish-processing, bidi-manufacturing and farm implements manufacturing were studied in two districts, viz., Balasore in Orissa and Beed in Maharashtra.

Among 45 micro-enterprises studied in these two districts, 37 were producing for the local market which was characterised by lower purchasing power and 29 applied traditional technology. This technology has not undergone any improvement either in terms of cost reduction or productivity enhancement or quality improvement during the last several decades. Other 16 enterprises were using either modern or intermediate technologies. However, little competition from outside existed for some traditional technology oriented enterprises such as brickmaking, stone crushing and bidi-making. The study clearly observed a product technology - market linkage.

Based on the above study it can be clearly generalised that marketing problems of rural enterprises are quite varied and industry specific. Some industries such as carpentry, foot-wear, cereal processing, bricks, cement works, stone-crushing, power-looms, stationery, chalk-making, etc. do well in local markets. However, they are not able to stretch into subregional market. Small size of their operations, and shortage of working capital incapacitates some sub-sectors in responding appropriately to changes in the market behaviour. The incidence of product obsolescence in some industries in so high that nothing short of comprehensive technology, product and market integration could make the enterprises viable and pass the market test. Most rural micro-enterprises experience tremendous shortage of raw materials, weakening their viability. This leads to marginalisation and declining of certain enterprises, such as 'Ghani-oil' processing. The purchasing power of self-employed rural artisans is declining drastically, making them unable to even buy raw materials. High transport costs and expensive working capital reduces their earnings. Speculators and middlemen also deny them access to cheap raw material. These are some of the factors that reduce the competitive character of rural enterprises.

From the point of view of marketing, these rural non-farm enterprises can be classified into two categories, viz., those which do not have much marketing problems, and the others that experience daunting challenges in marketing. Rural enterprises that enjoy locational advantages as well as low cost labour can be found to be viable and can even face severe competition from brands of organised urban industry. Enterprises such as brick-making and stone-cutting are some of those that do not face any market threat. However, major problems lies with the enterprises which are positioned with competition against large-scale industrial brands. Small size of operations of these units make them incapable of catering to larger and institutional markets.

Even though some enterprises are successful at local markets they could not stretch into regional and external markets due to working capital shortages, lack of fair market environment that ensures speedy realisation of sale proceeds, and lack of critical market information. Wherever they are required to sell to government organisation or single buyers, the sellers could not exercise any freedom in determining price and other marketing terms. The development institutions like Handicrafts and Handloom Development Corporations that have shown a lot of potential in the beginning have eventually turned out to be no better than the existing marketing agents. In spite of these institutions, the rural artisans still resort to the traditional private traders whenever they experience financial exigencies. Marketing institutions that have the potential to guide the rural entrepreneurs towards product improvement have not succeeded in their objective. The rural entrepreneurs continued to use the traditional designs for local markets. What is required is systematic market promotion through building up of market intelligence, product designs, bargaining strength and exploration of new markets (Gangappa, Narayana and Purushotham, 1998).

To concretise, it can be said that during the last four decades the market for the rural nonfarm sector in the country has grown complex, throwing out new opportunities as well as challenges. Opportunities are in the form of improved technology, higher productivity, potential new product lines and new market segments, while the challenges are intense competition from larger and more efficient enterprises and ever increasing expectations of consumers who are trained to be brand-conscious. Market development intervention strategies, in this background, have to be location and industry specific.

Government efforts to strengthen and support marketing of RNFS products

The Government of India has set up/reconstituted All India Handloom Board, All India Khadi & Village Industries Board, Coir Board, Central Silk for giving required assistance and support for the promotion and development of the industries. These Boards organised the infrastructure for marketing the goods produced in their spheres (Rama Rao (1985).

KVIC'S marketing network  

Khadi and Village Industries Commission created a marketing network for selling the products of khadi and village industries, in addition to supply of raw materials, KVIC gives credit, equipment, technical guidance, raw materials and help in marketing the products. The Commission also helps in setting up Khadi Bhavans, Khadi Bhandars, Gramodyog Bhavans which undertake whole-sale and retail sale of khadi and village industries products. KVIC offers largest marketing network ranging from the metropolitan areas to the districts and blocks.

Handloom Emporia 

The marketing infrastructure of handlooms consists of the apex level cooperative societies in the states and the handloom development corporations which deals with handloom products in the non-cooperative sector. The apex cooperative societies developed sales outlets in metropolitan and urban areas. The more dynamic of the apex societies market on a national scale whereas others concentrate their sales in their respective states. Major Expos are organised in metropolitan cities and cities and mini expos are arranged in towns and urban areas.

The marketing support given by the apex societies to the primary societies is of the order of 50 per cent in Tamil Nadu and Andhra Pradesh. In other states, marketing support is comparatively less. The larger primary cooperative societies of Tamil Nadu and Andhra Pradesh have their own retail sales outlets. Modernisation programme is being drawn up for implementation by various agencies involved in handloom marketing. The NCDC gives assistance for construction/renovation of show rooms. The office of Development Commissioner (Handlooms) provides share capital assistance to handloom apex societies and state handloom corporations. Some portion of this money can be utilised for improving the marketing infrastructure.

Marketing structure of handicrafts 

Marketing and service extension centres are set-up with the object of providing package of services to artisans in their production & marketing efforts and to improve marketability of the products. These centres have organised several market meets at important commercial centres. Initially, about Rs. 2 crores were contributed towards the share capital of 12 State Handicrafts Corporations and Apex Cooperative Societies so as to help them to buy handicraft products directly from the artisans and provide services to the craftsmen. In the field of exports, registration of exporters, issue of G.S.P. certificates/visas etc. were given. A carpet export promotion council was set up in 1982 and another exports promotion council is being

set-up for other handicrafts. The exports of handicrafts.recorded a phenomenal increase from the level of Rs. 80.30 crores during 1970-71 to over Rs. 1,000 crores during 1980-81.

Khadi Gramodyog

Khadi & Village Industries Commission which has vast network of units provide a variety of consumer products and plays an important role in national development. It is eco-friendly and bio-degradable and provides employment to rural poor. There are 7500 big and small Khadi Gramodyog Bhandars/Bhawan throughout the country. These are run by Khadi Institutions and recognized by KVIC, an autonomous body under the Ministry of AgroRural Industry, Government of India. A total of 2500 sale outlets under REGP/Franchise scheme will also set up. At present, Khadi sector is involved in the production of a large number of items that include Khadi (cotton, silk, muslin, and woolen) and a wide range of village industry products such as honey, handmade paper, agarbatti, soap, leather goods, herbal shampoo, oils, processed cereals and pulses etc.

KVIC has made a strategy to adopt all the marketing techniques, especially in the business of retailing, such as modernization of existing sales outlets, computerization in sales, bar coding of products, renovation of old Khadi Bhawans, improving product quality, branding of products, etc. To ensure wider accessibility among consumers, KVIC, has started branding its products. At first, Sarvodaya brand was launched through private channels of distribution at Mumbai by Yashwant Sinha, the then Union Finance Minister in October, 2001 and initially toilet soaps, honey, agarbattis, pickles and spices were selected. Products under 'Khadi' brand have been developed and it has been decided to develop a new range of products such as herbals, essential oils, fine khadi materials, designer garments etc. which was formally launched for test marketing at exclusive khadi stores in New Delhi. Similarly, the brand name for organic food products was identified as 'Desi Aahar'. Sale of organic food product was stated through sale outlets of KVIC IIT- New Delhi, National Institute of Rural Industrialization (NIRI) in Vardha, Agriculture and Processed Food Products Export Development Authority (APEDA) and many other experts in the field are actively giving their support for effective marketing of organic food products. Khadi fabric is getting fashion touch. A Design Development Cell has also been opened at NID and KVIC (Bombay). In addition to branding of KVİC products, the quality of products is maintained by encouraging KVI units to adopt standard specification developed by agencies like BIS, FPO, FDA, AGMARK, ISO(TOM) standardizing the product specifications as per national and international standards. The production from the KVI sector during 1998-99 was valued at Rs. 93242 millions.

Agro and Food Processing

Agro and food processing sector is characterized by vast resource base, diversity of agro-climatic conditions under which the resources are produced, the chain of intermediaries involved from the stage of production to the final stage of consumption and the signification share of the resources being utilized. Presently, the Indian food processing industry is largely involved in primary processing, accounting for over 80 per cent of the output value. The size of Indian food industry is of the order of Rs. 2,500 billion in 1997, it is expected to double by the year 2005 (McKinsey's). Considering the resources on which they are based, the agro and food processing sector can be categorized in to the following sectors:

• Cereal processing.

• Fruit and vegetable processing

• Animal product foods

• Marine and inland fish processing

• Dairy processing

• Plantation and nut-foods

• Spices and flavour foods

• Oilseeds and oil processing

• Sugar and confectionery products 

• Beverage foods

• Backed foods

• Traditional foods

Indian produces about 11 per cent of the world's vegetables and 7 per cent of the fruits. It is second largest producer of fruits and vegetables with an estimated production of over 130 million tonnes, yet, its market share of the world trade in processed fruits and vegetables is less than 1 per cent. The per capita consumption remains at sub-optimal level of adequacy. The fruit and vegetable processing industry comprises 

• preservation by canning

• preservation by freezing

• preservation by dehydration

• preservation by freeze drying and 

• value added products, sauces, jams, squash, chutneys etc. 

The processing sector in fruit and vegetable handles only very insignificant share of the total production i.e. 1 percent. The installed capacities of fruit and vegetable processing industry grew from 8.94 lakh tonnes in 1991 to 21.0 lakh tonnes in 1999, while production of fruit and vegetable products showed an increase of 300 per cent, from 3.60 tonnes in 1991 to 9.8 tonnes in 1999. Most of the fruits and vegetables are seasonal preservation and processing make them available in hygienic conditions. Importantly, fruit juice industry has been one of the world's major agro-business. The world trade in fruit juices and concentrates is estimated to be around US $ 5.17 billion in 1995. India's destination of export has remained largely constant, the major importers being the Gulf countries (Saudi Arabia, United Arabs Emirates and Kuwait) and smaller quantities reaching the Netherlands, Federal Republic of Germany, United Kingdom and United States of America.

Market segmentation of food processing industries is as follows:

• Soap industry: Onion, tomatoes, garlic, mushrooms, asparagus, parsley bell peppers, cabbage, cauliflower, carrot, etc.

• Instant-mixes industry: Snack and savory.

• Food services: Canteens, cafeterias, armed forces, ration and expeditions

• Confectionery industry: All dehydration's fruits in different forms and style. 

• Breakfast food industry: Milk, cereals and fruits and vegetables based.

• Retail trade: Good scope for vegetables and fruits in dried form.

India has been one of the largest producers and consumers of a very large variety of species over 50 species of species totalling over 2.5 million tonnes per annum. Apart from its traditional role to provide the culinary variety, palatability, species are now credited with the roles of antioxidant, digestive and curative properties. Hence, species are now finding much wider acceptance in continental and international cuisines. The processing sector consists of very large number of highly dispersed units in the cottage sector and about 50 units in the organized sector which includes a few units producing value added products like spice oils and oleoresins for export. During 1998-99 India exported Rs. 7058 million worth of processed fruits and vegetables products. The export of fruit and vegetable products grew by 21 per cent during 1994-99. Significantly, world trade in dried and dehydrated vegetables increased from US $ 801 million in 1988 - US $ 1057 million in 1992. Industrialized countries account for almost 71 per cent of total world imports, while the developing countries accounted for 29 per cent. Developed countries have increased their share of exports of dehydrated vegetables from 52 per cent in 1988 to 61 per cent in 1992. The share of developing countries fell from 44 per cent to about 35 per cent during the period. The major items of India's export include dehydrated onion, dehydrated tamarind and dehydrated mushroom. These items of export constitute almost 90 percent of India's export of dehydrated vegetables and fruits. Major importers of mushroom from India are Switzerland, France and Germany. Countries to which onion is exported are United Kingdom, Singapore, German Federal Republic, United Arab Emirates, the Netherlands and Saudi Arabia. Garlic Powder/Flakes are mainly exported to Japan, United Kingdom, Canada.

The size of the Indian Food Industry is expected to grow substantially to about Rs. 5000 billion by 2005. This indicates the potential for growth, in quantitative and value terms, both in the domestic and export markets. However, it requires policy shifts towards holistic development of the industry along with the diversification of agriculture, technological development and strengthening backward linkages of food processing industries.

Powerlooms 

The powerloom sector largely meets the clothing needs of the country's population and accounts for around 55 per cent of the total cloth produced in the country. The textile industry (comprising textile mills, handloom and powerloom units) forms an important part of the Indian economy both in terms of employment and production. There were 335791 powerloom units and 1.57 million looms as on December 31, 1998. In 1998, powerloom sector produced 15.65 billion square metres of cloth and employed 3.94 million persons.

Handicrafts 

Handicrafts embody the traditional skills of artisans who are a variety of materials - wood, metal, clay, ivory, cloth, etc. to produce consumer articles as well as decorative or artistic products. Today, only artistic and decorative articles are classified as handicrafts. The

All India Handicrafts Board is responsible for the development of the industry while the Handlooms and Handicrafts Export Promotion Corporation promotes exports from this sector. This industry around employs 8.15 million persons and exports of Rs. 6457.69 million during 1997-1998.

Handlooms

The handlooms sector form a part of India's rich heritage and exemplifies the richness and artistry of the weavers. The production of handloom fabrics in 1997-98 was 7,862 million square meters and contributed to nearly 23 per cent of the total cloth produced in the country. The exports of the handloom textiles rose from Rs. 1,759 million in 1996-97 to Rs. 1,860 million in 1997-98.