30+ Profitable Small Business Ideas for Rural Areas, Villages, and Small Towns in India

70 per cent of the Indian population lives in rural areas and small towns. This makes it all the more profitable to start a new business in these areas. With most businesses dependent on the agricultural sector, there are lots of opportunities to explore. Here are 30 profitable Business Ideas for Rural Areas one can check out, to become an entrepreneur in a village or small town in India:

Top 15 Business Ideas for Rural Areas, Villages and Small Towns

1. Grocery Shop

A Kirana or a grocery store can be compared to a departmental shop in local neighbourhoods. Such a shop would include various household items such as rice, wheat, spices, vegetables, soaps, and shampoos. One of the easiest and most practical business ideas in a rural area, this option is very feasible. It will never go out of demand, no matter what the market situation is.

The investment required to set up a grocery store depends on the size of the store. It could be a small shop that serves daily rations. Or it could be something like a mini-mart, where customers can pick their items. Located in a good area, this can fetch a moderate and regular flow of income.

The store has to be well-stocked at all times for the best results. The focus needs to be on providing excellent customer service. Home delivery could add to its success.

2. Milk/Dairy Center

With so much cattle rearing, milk would be abundant in rural areas. This makes a milk or dairy center a perfect business idea in a rural area. This involves collecting milk from houses and supplying the same to the local dairy farms.

A milk/dairy center is one of the low-investment business ideas for rural areas. However, one has to tie up with various dairy farms to make this a successful venture.

3. Flour Mill

One of the best village business ideas is establishing a flour mill. Most people in rural areas may not prefer to buy packaged flour as grains are grown there in abundance. Investing in a floor mill might work out feasible if there are options to grind various types of grains.

The low investment makes a flour mill, one of the best small-town business ideas in India. You can expand the business by supplying products to nearby villages and towns. The challenge, however, is to find a place with an excellent electrical connection. Having 24/7 power backup might help.

4. Poultry/Livestock Farming

Active support from government agencies makes poultry farming one of the most lucrative rural area business ideas. One of the most common business ideas for rural areas, a poultry farm may not even need much land. The huge demand for eggs and chicken makes it all the more worthwhile.

Although not capital-intensive, a poultry farm does require some experience to run successfully. Starting small is a good way to minimize losses. The products can be sold in nearby cities for more profits.

5. Restaurant

Like in any other place, a restaurant can work well in a rural area too. If a sit-down restaurant is not an option, opening a fast-food might be a good business idea in rural areas. There may not be too many such restaurants in rural areas and so the competition would be less.

Providing good food at reasonable prices might be the key to running a successful restaurant. However, it is important to choose a good location to make sure customers keep coming. A space on the main road or near the bus stop might be beneficial.

Also, read: 41 Best Food Business Ideas in India in 2023

6. Cold Storage Unit

Starting a cold storage unit is one of the one-time-investment small business ideas for rural areas in India. Although the initial investment is a bit on the higher side, the returns are quite high in the long run.

This involves preserving vegetables and fruits in cold storage to prevent them from spoiling. Not only will this offer better remuneration to the farmers, but it will also reduce commodity wastage. Cold storage is also best for medicines and packaged/processed foods.

7. Garment Store

Although not agriculture-related, this is still one of the most profitable business ideas for rural areas. A garment store with quality apparel can create great demand in small towns and villages. It will reduce a lot of travelling time and effort on the part of the villagers.

Having good contacts with garment suppliers is very important for the successful running of a garment shop. Tailoring services could be arranged to improve customer service. A good location is a must. Understanding the exact requirements and preferences of customers can help in increasing profitability.

8. Threshing Machine

Buying a tractor with drilling and threshing equipment can work out profitably in villages. Very few farmers own threshing machines in rural areas of India. As such, there would be a lot of demand for rentals of this equipment, especially in the harvest season.

If buying a new one doesn’t seem feasible, a used one can be obtained at a good rate. Regular maintenance of the equipment is necessary for the successful running of this business. Reliability and timely service can bring in absolute customer satisfaction.

9. Hotel

Starting a Bed and Breakfast unit or a homestay can be among the most profitable business ideas for rural areas. There can be a lot of demand for such setups, especially if it is a tourist spot. If building a new structure is not feasible, an existing structure could be converted into a comfortable accommodation.

There are several licenses and permits to be obtained before starting a hotel in India. A lot of groundwork needs to be done including competition assessment. Nevertheless, if it is a good location that receives a decent number of tourists, this idea can be a great hit.

10. Sweet Shop

Setting up a sweet shop can also work wonders while looking for business ideas in rural areas. Most people in rural areas are fond of sweets and would love to buy them now and then. No festival or celebration would be complete without these sweets.

Making sweets doesn’t require any expensive equipment. Hence the investment would be less and the returns would be high. Nevertheless, the focus needs to be on preparing and packaging sweets hygienically. With the right kind of marketing, things should fall in place.

11. Small Gym or Fitness Center

One may not find too many gyms or fitness centres in rural areas. Nevertheless, this can be one of the most rewarding business ideas for rural areas. Excellent equipment and good fitness trainers are a must. However, the investment requirement will still be lower than launching a gym in an urban area.

Word of mouth is a powerful way of marketing a fitness centre in a rural area. With the selfie culture and the popularity of social media increasing, getting customers should not be a problem. All this might take a while; but with the right kind of passion, it is doable.

12. Electronics Shop

Like in the urban world, people in rural areas also thrive on entertainment. They love to watch TV, listen to music, and play games on their smartphones. Hence an electronics shop might seem a great business idea in the rural area.

An electronics shop might require a high initial investment. However, a clear understanding of the customer requirements might make it easier to stock hot-selling items. Allowing payment in instalments can increase the popularity and maximize the profits of an electronics shop.

13. Travel Business

Like city dwellers, rural residents also face emergencies when it becomes important to arrange for commutes.  Starting a travel business might be a good way to tap into this market.

A few used cars should be good enough to start a travel business. Going ahead, you can increase the number of vehicles depending on the increase in demand. The key is to keep it affordable and convenient.

14. Catering

A catering business might work well in a small town rather than a village. For parties and functions where a large number of people stay, there is a need for catering. Once established in the catering business, these opportunities are easy to come by.

Initially, home-based catering would be best which requires less investment. Gradually you can expand the business to cater to a larger customer base.

15. ATM Space Rental

Banks are always looking for space to install their ATMs. They take areas on lease for a certain period and go on to renew the contract after two or three years. For one looking for a regular monthly income, it might be a great idea to offer space on rent for an ATM. Self-owned space does not require any investment.

15 Profitable Business Ideas for Rural Areas

1. Pesticide / Fertilizer Store

A pesticide or fertilizer store can be one of the perfect business ideas in a rural area. With the rural economy based mainly on agriculture, there may be many takers for the products. However, this does require a license.

The discounts given by fertilizer companies and the subsidies offered by the government make a fertilizer store profitable. The shop can also include seeds for more business. In-depth knowledge about plant nutrition and soil can help.

2. Garment Store

Although not agriculture-related, this is still one of the most profitable business ideas for rural areas. A garment store with quality apparel can create great demand in small towns and villages. It will reduce a lot of travelling time and effort on the part of the villagers.

Having good contacts with garment suppliers is very important for the successful running of a garment shop. Tailoring services could be arranged to improve customer service. A good location is a must. Understanding the exact requirements and preferences of customers can help in increasing profitability.

3. Medical Store

Opening a medical store might seem a feasible business idea in the rural area. Apart from reducing the efforts of the villagers, this idea can help them get their medicines on time. A regular supply of medicines can be arranged by tying up with medicine suppliers in the nearby cities.

Holding a degree or diploma in pharmacy is mandatory to open a drug store in India. Nevertheless, one can get a license by employing a full-time qualified and registered pharmacist. An easier way to open a medical store would be to buy a franchise. The store can be started with a low investment and the profit margin would be fixed by the parent company.

4. Automobile Repair

Most people in villages rely on their two-wheelers and four-wheelers for commuting. However, they go to the city for servicing and repair of their vehicles. So, opening an automobile repair shop can prove to be one of the most lucrative business ideas for rural areas.

A certain amount of experience and skill is a must to open an automobile repair shop. Hiring professional mechanics is an option. Nevertheless, a well-equipped workshop is what will make an automobile repair business a successful one.

5. Selling Farmer Yield in Cities

Most farmers in the rural areas of India end up selling their products to local distributors at very low prices. These distributors make a lot of money by reselling this produce in nearby cities at high prices. A lot of this can be avoided by helping farmers sell their yield in cities.

Selling the produce directly sourced from the farms can fetch higher prices in cities. There is a lot of demand if the vegetables and fruits are grown organically. The farmers will also get reasonable prices for their produce. They won’t have to take loans to sustain their lives. This makes it one of the best business ideas in India’s small towns.

6. Tutoring Service

Not all people in rural areas of India are well-educated. Nevertheless, they are ready to do anything to make sure their children get quality education. This is where a tutoring service might help.

Although not exactly one of those typical business ideas for rural areas, a coaching centre can fetch good profits in small towns. It shouldn’t be too difficult to hire qualified and skilled teachers here, as there will be many options. Starting small with a limited number of teachers may not require much investment. Quality tutoring can lead to a decent growth of business with time.

7. Candle / Match Box Manufacturing

Starting a candle or match box-making unit might seem a lucrative business option in rural areas. The easy availability of labour can make this one of the profitable village business ideas. The equipment required may not be that expensive. The business can be carried out in a small space.

There is a lot of demand for decorative and scented candles. The materials are available at a low cost. Pictures of samples can be put up on online portals and orders can be taken to improve business. This idea will also create opportunities for rural empowerment.

8. Agarbatti Making

Making Agarbattis or incense sticks is something rural women can do from the comfort of their own homes. By providing the necessary materials and training, many orders can be completed without much of an investment.

The demand is always high for good quality Agarbattis, not just in India, but abroad too. Machines are also available for faster manufacturing of these products. However, it is important to check the license requirements and regulations of the state, before starting this business.

9. Aluminum Foil Manufacturing

Aluminium foil can be used for different purposes. A few of these include the packaging of coffee and tea, frozen poultry, bakery commodities, pharmaceutical pills, biscuits, cigarettes, and so on. There is a lot of demand for this product and it is not too tough to manufacture the same.

Compared to the other business ideas for rural areas, this one might require a high initial investment. Once the machines are all set, they will fetch good returns in the long run. Tying up with a few industrial units can help in obtaining regular orders for better sustainment of business.

10. Spice Powder Making

There is a huge demand for homemade spice powders in India as well as abroad. The preparation of spice powders like turmeric powder, coriander powder, and chilli powder is easy and quick. Hygienically prepared and packed, these spice powders can assure a decent recovery at the earliest.

The investment required for this business is very low. To start with, these spice powders can even be prepared at home, with bare minimum equipment. All that is required is some good marketing skills and a strong network of customers. This is one of those rural area business ideas with massive scope for expansion.

11. Air Bubble Packaging

Air bubble wrapper is one thing that the packaging industry depends upon. It is a transparent and flexible plastic sheet with several tiny air pockets. It is very useful in wrapping fragile commodities securely. There is a huge demand for this product across the world.

Equipment required to manufacture air bubble packaging includes Polycell Bubble Sheet Making machine, an air bubble film extrusion machine, and an air bubble film laminating machine. It requires a bit of time and effort to achieve expertise in making air bubble packaging. However, all this can be worthwhile once the business becomes profitable.

12. Bakery

Starting a bakery might also seem a very good business idea in rural areas. With minimal equipment and small space, one can set up a profitable bakery business, within a short period. It does require some amount of training and experience. Hiring qualified bakers will cover all of these needs.

With the population increasing in rural areas, the demand for baked goods is increasing rapidly. Choosing a good location without much competition is key to making a bakery business successful. It makes sense to start with a semi-automatic procedure and gradually move towards a fully automatic bakery.

13. Saloon Shop

Opening a salon in a rural area, village, or small town, might seem a good idea. With today’s generation becoming more and more beauty-conscious, the demand is always high for saloon shops. Even if there is competition, quality service coupled with good marketing can bring in money.

You can start a saloon shop in a small space with minimal investment. This requires some skill and experience, but you can hire professionals. With time you can expand the business to different locations and the profits can increase.

14. Electrical / Hardware Store

People in rural areas are more self-reliant when compared to those in urban areas. They would have learned most of the electrical and plumbing skills to fulfil their requirements. However, they still have to travel to the nearest cities to purchase items. Establishing an electrical cum hardware store might help in grabbing this opportunity.

All you need is a small shop and some money to stock the essential supplies. With the right kind of marketing and supplier contacts, you can set a hardware store in no time. There is a lot of scopes to increase profits and expand the business.

15. Juice Shop

With vegetables and fruits available in abundance in rural areas, it makes sense to set up a juice shop. Minimal equipment and limited space should be good enough to start one. Most people in rural areas are hardworking and can do with some juice for refreshment.

The low investment makes juice shops one of the ideal business ideas for rural areas. With the cost of fruits being low, there is a huge margin for making profits from a juice shop. The key is to keep it well-stocked and keep adding new items to the menu.

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

The ‘Startup India’ initiative was launched by the Government of India on January 16, 2016, to promote entrepreneurship, innovation, and startup culture in the country. The launch of ‘Startup India’ marked a significant step towards creating a more favourable environment for businesses to thrive.

Contributing to the GOI’s vision of an ‘Aatmanirbhar Bharat’, the ‘Startup India’ initiative reflects the government’s commitment to fostering a culture of entrepreneurship and innovation, to position India as a global hub for startups.

Here’s how the initiative benefits the startup culture in India and contributes to the well-being of the youth:

1. Ease of Doing Business

‘Startup India’ focuses on simplifying regulatory processes, making it easier for businesses to register and operate. This reduces hurdles and encourages more aspiring entrepreneurs to take the leap of faith into starting their businesses.

2. Access to Funding

The initiative aims to provide easier access to funding by establishing a dedicated fund for startups. It encourages financial institutions and investors to support innovative ideas and early-stage companies, helping them scale and grow.

3. Tax Benefits

Startups registered under the initiative can avail of various tax benefits, including exemptions from capital gains tax, tax holidays, and a reduction in compliance costs.

4. Skill Development and Training

The ‘Startup India’ initiative emphasizes skill development and training programs to equip aspiring entrepreneurs with the necessary knowledge and skills to run successful businesses. 

5. Market Access

The ‘Startup India’ initiative facilitates market access for startups by connecting them with potential customers, both within India and globally. This helps startups scale their operations and tap into larger markets, contributing to their overall success.

The Startup India Initiative has been a boon for young entrepreneurs in India. As the Prime Minister has urged, “Keep your dreams local, make them global,” the country has experienced a renaissance of innovation and entrepreneurship, even in rural parts of the country. Thanks to the fruitful steps, schemes, and initiatives of Startup India, it has been able to create and nurture an ecosystem that is conducive to business growth.