Indian biggest fuel retailers gearing up for rural-led economic rebound

 The increasing economic importance of India's hinterlands is influencing business expansion plans and accelerating a trend of more service stations being opened in the countryside

If there’s one part of India’s economy that’s been relatively unscathed by the devastating impact of Covid-19 it’s the vast rural hinterlands. And the country’s biggest fuel retailers are sitting up and taking notice.

Stay-at-home orders first imposed from March last year had a disproportionate impact on India’s teeming cities, but in small towns and villages people mostly went about their business with fewer restrictions. A bumper agricultural crop and a splurge in government spending to pull the economy out of a slump is also expected to put more money into the hands of rural farmers and laborers.

The increasing economic importance of India’s hinterlands is influencing business expansion plans and accelerating a trend of more service stations being opened in the countryside. Bharat Petroleum Corp. and Hindustan Petroleum Corp. -- two of the three biggest fuel retailers -- both said they planned to raise the proportion of outlets they have in rural areas this year.

“While the first-level cities are getting saturated, demand is coming up in rural areas,” Hindustan Petroleum Chairman Mukesh Kumar Surana said. The new outlets Hindustan is looking to open would “have a reasonable component of second-rung cities and rural areas without any doubt,” he said.

India is pinning its hopes on the agricultural sector to help pull the economy out of its worst recession since the 1950s. Rural India was a bright spot in local automaker Mahindra & Mahindra Ltd.’s latest financial results amid strong demand for tractors and farm equipment. The rural sector continues to outperform urban India, Ambuja Cements Ltd. Chief Executive Officer Neeraj Akhoury said on a conference call with analysts last month.