Profitable Small Business Ideas for Villages and Rural Areas – Best Opportunities to Start

Best Business Ideas for Village, Rural Business Ideas in India

In rural areas, where community ties run deep and resources are abundant, village business ideas thrive on ingenuity and local needs. From agricultural ventures like organic farming and livestock rearing to cottage industries like handicrafts and traditional textile production, the possibilities are endless in small business ideas in villages. Small-scale food processing ventures such as dairy products or artisanal food items cater to both local demand and niche markets.

Aatmanirbhar Bharat, the idea propagated and supported by the Government of India is all about becoming technically and financially self-reliant rural business ideas.

With more than 70% of the population residing in villages and small towns, the opportunities for small business ideas in villages are more in these areas. As most of the businesses in the rural hinterland are directly or indirectly dependent on agriculture or a related sector, there are a number of opportunities available to explore and flourish with time.

Why Should You Start a Business in a Village?

Apart from the government’s push towards promoting rural industries, there are several compelling reasons to start a business in a village:

• Economical: Rural areas in India offer lower costs for land, utilities, and labour compared to urban centres. This makes starting and running a business more affordable, allowing entrepreneurs to save overhead expenses while maximising profits. 
• Abundant Opportunities: With a largely untapped market and growing consumer base, small village businesses offer immense growth potential. From agriculture and manufacturing to retail, various industries can thrive by meeting the needs of rural consumers. 
• Less Competition: Villages often have less competitive markets than cities. This gives businesses room to grow without facing intense competition. As rural areas develop, entrepreneurs can take advantage of emerging market opportunities that have yet to be fully explored. 
• Access to Resources: Rural areas may have unique natural resources, such as agricultural products, that can be leveraged for various businesses. Entrepreneurs can capitalise on these local resources to create products or services that cater to both rural and urban markets.  
• Community Support: Residents often support homegrown businesses, fostering loyalty and community ties. This creates a strong customer base and enhances word-of-mouth marketing. This helps the business thrive within the community. 
• Government Support: Government schemes like Startup India offer specific support to rural entrepreneurs, from financial assistance to training programs. This makes rural entrepreneurship more feasible and accessible. 

How to Start a Business in a Village in India?

Follow the below steps in order to start your own venture in a village in India:

• Idea: Identify a business idea that aligns with local demand, available resources, and your personal interests. A well-defined idea is crucial to lay the foundation for your business plan. Conduct thorough research to understand market potential and determine the feasibility of your idea. 
• Money: Adequate funding is vital to kickstart your business. Whether through personal savings, loans, or government schemes, ensure that you have the necessary capital to cover initial expenses. Consider seeking advice from financial experts or exploring government grants to support your venture. 
• Legal Requirements: Ensure that your business complies with all local laws. Seek legal assistance to register your business, obtain licences, and fulfil other formalities. Staying updated on regulations will help avoid legal issues that could hinder your business. 
• Infrastructure: Based on your business model, arrange the necessary infrastructure. This could include renting space, sourcing equipment, or securing inventory for operations. Make sure that your infrastructure can handle future operations and adapt to changing market demands. 
• Start Your Operations: With all the essentials in place, begin operations. Focus on delivering quality products or services to build trust and generate positive word of mouth. Constantly monitor customer feedback and be flexible to make improvements where necessary. 

Explore Best Business Ideas For Village Here

If you’re exploring opportunities for rural entrepreneurship that can yield a steady income, consider a range of village business ideas at your disposal. Among the array of options, ventures tied to agriculture, livestock, handicrafts, tourism, and education stand out. Leveraging local resources, talents, and market needs, you can embark on a small-scale enterprise within the village milieu. For instance, cultivating organic crops, tending to poultry or dairy herds, crafting pottery or baskets, providing homestay accommodations or guided excursions, or delivering online courses are all viable avenues to explore. If you’re seeking financial assistance to kickstart your venture, consider exploring the possibility of a pottery loan to support your pottery-making enterprise.

These are some of the rural business ideas that can be profitable and sustainable in the long run. You can also explore other opportunities based on your interests, expertise, and location. The best business in village area is the one that suits your needs and goals. Some of the small business ideas in villages that can be explored in the small towns are discussed below for entrepreneurs to take a call.

Some of the business ideas for new-age entrepreneurs in small towns/villages are:

1. Retail Store

With the majority of the population residing in rural India, there is a shortage of well-planned retail outlets in these marked areas. The outlets can be of different types that cater to a different sections of the population. One such option that is very easy and practical is opening a Kirana store.

The Covid crisis has proved the resilience of the Kirana shop owners and the adaptability to learn and change according to the new scenario. It is a very feasible option and is never out of demand provided the Kirana store is opened at the right place, has good customer service and is well stocked (supply chain). The other shops that can be opened in the rural hinterland are:

• Sweet shops
• Tailor shop
• Electronics shop
• Saloon shop
• Cosmetics shop
• Two-wheeler/four wheeler mechanic
• Fruit shop/juice shop
• TV/Radio/Mobile mechanic
• Electrical/plumber shop

Before opening the above-mentioned shops, it is necessary to have a certain level of expertise. It is necessary to have some skills and knowledge to open a shop. However, one benefit of opening a retail outlet is, that it requires less amount of time to start the business and it is ready, making demand for such essentials in every place.

2. Flour Mill

Another idea that can be worth exploring is the establishment of a flour mill. In rural areas there is no paucity of raw material(cereal) for the flour mills, moreover, people don’t purchase the packed flour from the markets as visible in urban areas. It is a very feasible and profitable business if you grind other grains along with wheat like corn, oats, barley, sorghum, and spices like turmeric, chilli, etc.

The flour mill can also supply the products to nearby cities and towns at profits. It is a good business and requires limited money but a good electrical connection to start and run the business.

3. Small-scale Manufacturing Units

Rural areas and small-town are ideal locations to start small-scale manufacturing units to cater to the demand in the local area as well as supplying products to nearby towns and cities. These manufacturing units can be for various products like:

• Agarbatti
• Candle/ matchbox
• Paper cup/paper plate
• Packaging products
• Disposable bags, etc.

Also Read: 10+ Best Wholesale Businesses in India 2024

These products have a large market in urban areas, whereas the raw material is in abundance in rural areas to become a profitable business with quick returns.

4. Clothing Store

Traveling to big cities for buying clothes on special occasions or for daily needs is very common in villages. Starting a clothing store with good brands, fabrics, and variety is a sure-shot way to success provided the owner has good contacts from the garment suppliers and the supply chain is intact.

If you can provide the latest fashions, designs, and styles of clothes, there will be a good demand for the products in the villages and small towns. You can also arrange tailoring services and provide handmade products for the clients at the store.

5. Poultry/live-stock Farming

The poultry farming business is growing at a rapid pace with active support from government agencies. Moreover, it is not capital-intensive and does not require much land. However, a person must have some experience to run the business. There is a huge demand for poultry products in rural and urban areas helps in reducing the return on investment. Initially, you can start with a limited number of birds and also the quality and variety of birds, and with time can increase the business. Along with the local demand, you can advertise and sell the meat/eggs in cities. You can also take ideas from our poultry farming business plan guide.

6. Fertilizer/pesticide Store

As the rural economy is largely based on agriculture, it makes perfect economic sense to start a fertilizer/pesticide business. It is necessary to apply for a license before starting the business. Moreover, you can also keep seeds along with fertilizer and pesticides.

7. Tutor Services

The shortage of well-qualified teachers in rural areas is a big problem and can be a good business idea to start a tutoring center with eligible teachers employed at the center. It will not only provide employment to qualified local youths but will help people to find a good teaching institute closer to their home for children. The business doesn’t require much capital and space, and, is a good business opportunity to explore, provided you have the qualification and necessary skills to run a center. The tutoring service can start with limited manpower but will grow with time.

8. Milk/dairy Center

Due to the abundance of milk in rural areas, running a milking center is a sound business idea. It can collect milk from individual houses and supply it to dairy farms. The fund requirement to start the center is less, however, the person must be qualified to run the center. Collection and supply of milk are possible only by tying up with a dairy farm. To start a local dairy project, one needs funds that can be availed from different financial institutions including banks, and NBFCs like Lendingkart.

9. Organic Vegetables/fruits

Organic fruits and vegetable market is growing rapidly and living near villages and small town presents a sound business opportunity to start growing and marketing the produce. However, it is not easy to start a business and requires farmland or a contract with farmers to grow the produce. Moreover, these are perishable goods and require refrigeration for storage. It is advisable to start the business closer to vendors for less transportation and logistic charges.

10. Threshing Machine

Purchasing a tractor with threshing and drilling attachments is a highly viable business opportunity in rural India, where few farmers own such machines. These machines are essential during the harvest season, leading to a high demand for renting them. Farmers prefer renting rather than purchasing, as it’s cost-effective for seasonal use. By offering these machines for hire, you can cater to multiple farmers and ensure a steady income, especially during peak farming periods. 

To keep costs manageable, consider buying a second-hand threshing machine. Maintenance is key to this business. Therefore regular servicing ensures smoother operations and customer satisfaction. By building trust through reliable equipment and prompt service, you can establish a strong reputation in your local farming community. 

11. Catering

Catering services can thrive in small towns where local events such as weddings, religious functions, and festivals require large-scale food preparation. Starting a catering business offers a great opportunity to tap into these community gatherings. Initially, you can operate from home with minimal investment by using your kitchen to serve small events and functions. Over time, as your customer base expands, you can scale up your operations. 

As your reputation grows, the demand for your services will increase. Investing in professional equipment and staff can allow you to take on bigger events. In rural settings, the catering business can provide a stable income stream while becoming a well-known service for local festivities.

12. Medical Store

A medical store is a crucial business where access to healthcare is limited. Opening a pharmacy can bridge the gap between villagers and their essential medications. It can become the most profitable business in rural areas in India. By partnering with medical suppliers from nearby cities,  you can ensure a regular stock of medicines and meet the needs of your local community. 

Although a degree in pharmacy is required to run a store, hiring a registered pharmacist allows you to operate without one. Alternatively, opening a franchise can reduce the initial investment while offering the benefit of a pre-established supply chain and business model. With health services in demand everywhere, running a medical store can offer steady profits. 

13. ATM Space Rental

Leasing out a portion of your property for ATM installations can be a smart business decision, especially in small towns. Banks are constantly on the lookout for safe, convenient locations to set up their ATMs. If you own property in a busy part of town, renting out space for an ATM can bring a reliable monthly income without much effort or initial investment. 

The business opportunity requires very little involvement once the contract is signed. Banks typically handle all the maintenance and security aspects, so you only need to manage the leasing agreement. With minimal setup and consistent returns, this can be a perfect choice for generating passive income in rural and semi-urban areas. 

14. Automobile Repair

In villages, two-wheelers and four-wheelers are essential for transportation, but repair shops are often far away. Setting up an automobile repair shop in a rural area can serve this unmet need, making it a profitable venture. Offering basic services such as oil changes, tyre repairs, and engine maintenance can attract local customers who would otherwise have to travel to the nearest city for similar services. 

Having skilled mechanics and investing in the necessary tools is vital to success. Even if you are not an expert, hiring trained professionals can ensure quality service. A well-organised and equipped workshop will position you as a reliable service provider, gaining the trust of local vehicle owners. 

15. Spice Powder Making

People’s love for spices makes this one of the most unique business ideas for small towns in India. Preparing spice powders such as turmeric, chilli, and coriander from locally grown produce can be done with minimal equipment and capital. The process is simple and can be started at home. This allows you to produce high-quality, homemade spice powders that meet the growing demand for fresh, unadulterated spices. 

Effective marketing is essential to build a customer base. By promoting your spices locally and in nearby towns, you can gradually expand your market. The low startup costs and scalability make spice powder production an attractive business idea for rural areas. 

16. Selling Farmer Yield in Cities

Helping farmers sell their produce directly in urban markets can significantly boost their income. Instead of relying on local middlemen who often buy crops at low prices, you can facilitate direct sales in cities where demand for fresh, organic produce is high. By cutting out the middlemen, farmers can get fairer prices for their yields, and urban customers benefit from farm-fresh fruits and vegetables. 

Establishing connections with urban markets and setting up a reliable transportation system are key to the success of this business. By acting as a bridge between rural producers and urban consumers, this venture can support sustainable farming and bring economic prosperity to villages. 

17. Educational Institution

The demand for quality education is growing in rural India. Setting up an educational institute is one of the best business ideas in villages as it can be a fulfilling and profitable venture. If you have expertise in subjects like maths, science, or languages, you can start by offering tutoring services to school children. Over time, you can expand into a full-fledged coaching institute or even open a private school. 

With proper planning and certified teachers, you can provide education that rivals urban institutions. Offering extracurricular activities and practical learning opportunities can further set your institution apart, attracting students from nearby areas.  

18. Diagnostic Clinic

Setting up a diagnostic clinic in a rural area can be both a service to the community and a profitable venture. While basic healthcare is often provided by government dispensaries, diagnostic services like blood tests, X-rays, and ultrasounds are usually available in cities. By offering these services locally, you save villagers the hassle of long-distance travel for medical check-ups.

The startup costs include renting a facility, purchasing equipment, and hiring certified professionals. Once operational, the clinic can cater to a steady stream of patients, as healthcare is a constant need. 

19. Jute Bag Production

As the world shifts towards eco-friendly products, jute bags are becoming increasingly popular. Starting a jute bag manufacturing business can be one of the most effective local businesses in a village. It can be both environmentally and economically rewarding. Jute is a natural, biodegradable fibre that is easy to source and inexpensive to work with. You can start small, producing bags from home and marketing them as eco-friendly alternatives to plastic.

This business is particularly suited for women and homemakers, as it can be managed from home with minimal investment. With increasing government support for Made-in-India products, jute bag production offers a sustainable income source and the potential for expansion.  

20. Packaged Drinking Water Business

Access to clean drinking water is a major concern in rural India. Starting a packaged drinking water business by becoming a franchisee of an established brand can meet this vital need. You can source fresh water from tube wells, treat it, and package it in containers for sale. Villagers are often willing to pay for the convenience of having safe water delivered to their homes. 

This business requires moderate investment but offers a steady revenue stream. With growing awareness of health and hygiene, the demand for clean drinking water will continue to rise. This makes it a reliable business option.  

Also Read: How to Start Organic Food Store Business in India

Business Plans

• Business Plan
• Restaurant Business Plan
• Bakery Business Plan
• Hotel Business Plan
• Agriculture Business Plan
• Transport Business Plan
• Coffee Shop Business Plan
• How To Start a Kirana Store In India?
• How To Start A Garment Shop In India?
• Tea Shop Business in India
• Poultry Farm Business Plan
• Cold Storage Business Plan
• Agarbatti Making Business Plan
• Catering Business Plan
• Salon Business Plan
• Laundry Business Plan
• Petrol Pump Business Plan
• Boutique Business Plan

Business Challenges in Villages and Rural Areas

Some of the challenges you can face while starting your business in a village or rural area are as follows:

• Market Access and Transportation: The cost of transporting goods in and out of rural areas can be high. Limited access to larger markets may restrict the reach of rural businesses. Exploring local markets or partnering with regional distributors can help expand the customer base. 
• Lack of Skilled Labour: Rural areas often have a smaller pool of skilled workers due to limited educational opportunities and migration to urban areas. Finding employees with specialised skills can be difficult. Entrepreneurs may need to invest in training programs to develop a local workforce. 
• Limited Access to Technology: Rural businesses may struggle with limited internet access. This hinders their ability to tap into e-commerce or digital platforms. Setting up alternative technology solutions like mobile-based platforms can help overcome this challenge. 
• Limited Financial Resources: Banks and financial institutions may be scarce in rural regions, making it harder for entrepreneurs to secure loans or capital. Entrepreneurs may need to rely on alternative funding options like microfinance or government schemes designed for rural areas. 
• Seasonal and Agricultural Economy: In rural areas or villages that depend on agriculture, business income may fluctuate due to seasonal patterns. This can affect cash flow and sustainability. Diversifying the business or offering complementary products or services can help smooth out these fluctuations. 
• Limited Infrastructure: Many villages lack proper roads, electricity, and telecommunications. This can disrupt business operations that rely on stable utilities and connectivity. Entrepreneurs must find innovative solutions, such as using solar power or working around transportation limitations. 
• Lack of Market Information: Limited access to market trends and consumer data can make it hard for rural entrepreneurs to make informed business decisions. Entrepreneurs can bridge this gap by using mobile technology or partnering with market research firms for insights. 
• Social and Cultural Barriers: Understanding local customs and social dynamics is critical in rural areas. Building relationships with the community is essential for business success. Engaging with local leaders and organising community events can enhance business reputation and acceptance. 
• Policy to Regulatory Constraints: Entrepreneurs in rural areas may face policies that are not conducive to business growth, such as restrictive land-use policies or burdensome bureaucracy. Staying updated on government initiatives and legal frameworks can help navigate these challenges. 
• Distance to Urban Centers: Being far from urban centres can make it difficult to attract customers or clients. This can impact business growth. Offering delivering services or using online platforms can help eliminate this problem and help you reach a broader customer base. 

Startup India- An Initiative by the Government of India to Boost Entrepreneurship

The Government of India’s “Startup India” initiative has been a game-changer in fostering entrepreneurship across the country, including rural areas. Launched in 2016, this initiative encourages individuals to innovate and create businesses that can contribute to India’s growth. 

• Access to Funding: The initiative provides access to funding through various channels, including government-backed funds. This helps startups secure the capital they need to grow. Entrepreneurs can also take advantage of networking events to connect with investors and mentors. 
• Ease of Doing Business: Startup India simplifies the regulatory processes, making it easier for businesses to register and operate. This initiative reduces bureaucratic hurdles. This, in turn, encourages more entrepreneurs to start their ventures. Entrepreneurs also benefit from a single-window system for approvals and registrations. 
• Tax Benefits: Registered startups under this initiative enjoy several tax benefits, including exemptions from capital gains taxes and tax holidays, which help reduce their financial burden. These incentives encourage long-term sustainability and growth of rural businesses. 
• Market Access: The initiative facilitates better market access by connecting startups to both domestic and international markets. This allows them to scale and reach a broader audience. This also includes connecting rural businesses to digital platforms and opening up opportunities in e-commerce. 
• Skill Development and Training: Through workshops and training programs, Startup India equips entrepreneurs with the skills and knowledge they need to succeed in their ventures. Entrepreneurs also have access to mentorship programs that provide guidance at every stage of their business journey. 

Apart from this initiative, you can get business loans from non-banking financial institutions (NFBCs). For instance, an NFBC like Lendingkart helps small businesses with the required loans so that they can reach their business goals faster. 

Small Business Loan

A small business loan is a customized loan to meet the financial requirements of a small/medium size enterprise. It is collateral in nature and is offered by all financial institutions to eligible borrowers.

Benefits of small business loan:

Some of the benefits of the small business loan are as follows:

• There is the flexibility to select from different loan schemes. Government schemes such as CGTMSE even doesn’t need collateral or a third-party guarantee.
• There is flexibility in the repayment tenure and depending upon convenience, one can select the EMI option.
• The rate of interest in government-backed schemes is low.
• It is easy to avail of the loans and the loan amount disbursement is quick.

Also Read: Government Loan Schemes for Small Business in India

Eligibility criteria of a small business loan

The eligibility criteria to get a small business loan is:

• Age: Minimum – 21 yrs, Maximum – 70 yrs
• Nationality: Indian nationals
• No case of default with any financial institutions
• Bank statements for the last 12 months
• Income tax returns for the last two years

Documents required to avail of a small business loan:

• Duly filled loan application form with KYC documents
• Complete business plan
• Identity proof: PAN card, Aadhar card, Voter ID, Driving license
• Residence proof: Utility bills, PAN card, Ration card
• Business registration documents
• Income tax returns for the last two years
• All kinds of licenses and required permits

Procedure to apply for a small business loan

The procedure to apply for a business loan is very simple and is defined below:

1: Check the eligibility criteria before applying for a small business loan.

2: Fill in the application form and submit it with all the required documents mentioned above.

3: Once the documents are verified after you submit them, the loan is sanctioned and funds transferred to the borrower’s account.

Read More: Business Ideas for High Profit with Low Investment

Conclusion

Starting a business in a rural area offers significant opportunities for growth and success if approached with the right vision and strategy. Entrepreneurs who leverage the unique resources of villages can create profitable ventures while positively impacting their communities. Moreover, the cost benefits, along with government support, make rural areas a promising ground for entrepreneurship. By tapping into the growing rural market and fostering local relationships, businesses can thrive while contributing to the social and economic development of these regions. 

Lendingkart supports entrepreneurs by providing easy access to financing. We help you to overcome financial hurdles and build successful businesses in India’s villages. By offering custom loan products, Lendingkart enables rural entrepreneurs to scale their operations and contribute to local economic development. 

Frequently Asked Questions

Is it possible to get a business loan in villages or small towns?

Yes, you can apply for getting a business loan from any bank in these areas. The rules and regulations are similar to the ones applied in the urban centre.

What are the things to keep in mind before starting a business in villages or small towns?

Before starting a business, it is advisable to do a feasibility study. Try to understand the competition and the demand for the place to plan accordingly. Also, funds and location are equally important to start the business.

What businesses are more profitable in rural areas?

Businesses that are agriculture-related are more likely to succeed as the raw material is in abundant supply, while you can send the supply to the nearby towns and cities for greater profitability.

Is starting a gift shop a profitable business?

Gift shop is a sound business in urban areas with more number of people undertake the activity during festivities, however, in rural areas it is not a successful idea but if you can add a bakery or a small snacks bar with the gift shop, it is likely to succeed.

Does starting the poultry business requires a license?

Yes, it is necessary to take a permit from relevant state and local authorities before starting a poultry business. Also, NOC from electricity and water department required.

Why do we need insurance for poultry business?

The birds that you breed in your poultry farms for meat or eggs are every prone to diseases. In case of an outbreak, it will lead to complete loss of bird population causing significant losses, hence it is advisable to take insurance cover for the poultry.

Does the income from fisheries/poultry income-tax free?

No, the income from fisheries/poultry business are not income tax-free. Although they come under the agriculture allied activities they are taxable.

Can one get a business loan for poultry farm?

Yes, starting a poultry farm is encouraged by the government and apart from the government scheme(MUNDRA), different banks also lend to the entrepreneurs. However, lending by banks is not collateral-free.

Does banks provide loans to start the flour mill?

Flour mill is a good business and depending upon the risk profile of the entrepreneur, the banks do provide the loan. The flour mill comes under MSME sector and loans are easy to get.

Is there any support provided by the government for organic farming?

Yes, in order to encourage organic farming in the country, the government provides the necessary assistance. In addition to NABARD, different other government schemes provide loans to farmers to grow organic crops.