A new strategy for rural success

Rural Business Hubs are changing the rules of marketing and brand promotion in small towns and villages

Rural India will no longer lag behind in marketing and brand promotion. A new culture is in the offing with the scheme for
Rural Business Hubs (RBHs) setting the tone in the direction.

Marketing of products made locally by corporates and multi-nationals in partnership with regional entrepreneurs and brand
promotion is at the core of the ambitious programme for setting up of RBHs launched by the Indian government. Union
Panchayati Raj Minister, Mani Shankar Aiyer puts a rider and says, “RBHs would not be misued for marketing and brand
building of products produced outside. Brand promotion and marketing would be for products produced only in the RBHs.”
He stresses that there would be a reverse flow, in fact—branded products from RBHs would reach urban markets.

The scheme for RBHs is the brainchild of Aiyer. It is on the lines of the Chinese rural business hubs and Thailand’s One
Tambon One Project (OTOP), meaning one product one enterprise. Chinese rural business hubs are industry clusters
manufacturing various products, while Thailand’s OTOPs are growth centres for producing specific products. Aiyer says both
these models can be replicated here.

The scheme envisages signing of MoUs by three stakeholders—the entrant corporate, the village panchayat (village local
government), which would provide the land, and the regional entrepreneur. The state government concerned and the central
government would be facilitators. In a sense, it would represent 4Ps—Public-Private-Panchayat Partnership.

Within a year of the launch of the scheme the number of MoUs signed by stakeholders has touched the magic 50 mark.
Union Minister of State for Commerce, Jairam Ramesh assures that related government schemes would be converged to
facilitate the growth of RBHs. “This would facilitate exports of unique products like handicrafts and processed food items
produced in RBHs. The RBHs can really emerge as growth centres in remote villages,” he adds.

The scheme for RBHs, co-sponsored by the Government and the Confederation of Indian Industries (CII), has encouraged
number of leading corporate houses and multinationals to set up production units in remote villages in partnership with the
regional entrepreneurs and the panchayats, the local village governments. For starters, ITC has agreed to set up 11 units for
fruit processing in different locations in Nainital district in Uttaranchal with the help of regional companies and institutions.
The products will be marketed under “a logo or a brand depicting distinctive geographical identity.”

Then there is Shameena Food Industries which has agreed to enter a similar partnership for setting up of a wheat-flour
processing unit in village Kodimangalam in Nagapattinam district in Tamil Nadu and market it under its own brand name.
Among others, KMR Industries will set up a unit for coconut products in Vallalaharam village in Tamil Nadu in partnership
with the village panchayat, and NAC Farm Products will enter a similar partnership for production of bananas in Annavasal
village in Nagapattinam district in Tamil Nadu.

Apart from food items, MoUs have been signed for other products like handicrafts and handloom, art work and designs for
garments and chamber bricks. NGO Self Employed Women’s Association has entered an agreement with Gauriganj block in
Sultanpur district in UP for handicraft and handloom products. National Institute of Fashion Technology has signed five
MOUs with five village panchayats in Hampi block in Karnataka for art works and design of garments. There are many such
partnerships in the pipeline.

Says Aiyer, “The scheme is meant for developing entrepreneurship in rural areas. Initially the concerned state and the
central government would assist the RBHs through convergence of its various scheme and thereafter they are expected to
be to be self-supporting.”

Currently, there is no governing body for the RBHs and each RBH is bound by the structure agreed upon under the MOU
signed. A national council has been set up to monitor the overall functioning of the RBHs. Besides, there are state-level
councils to monitor their functioning. These councils are headed by the minister in-charge of panchayati raj.