Yogesh Deveshwar, the boss of India's biggest tobacco firm, is putting rural India online
SHADED by the generous boughs of an ancient neem tree and overlooked by the village temple is the traditional choupal, or meeting-place, of Badamungalaya in the Indian state of Madhya Pradesh. A few narrow lanes away, in the spartan front room of Rajesh Nagodia, a local farmer, is the e-choupal: a desktop computer, with an internet connection and revolutionary implications for Badamungalaya and 4,150 other villages. The upset in India's recent general election was seen as a rebuff from such villages to a ruling party that boasted of “shining” successes. They had passed the countryside by. The e-choupal initiative is an attempt to join the urban India of rapid growth and a world-beating information-technology industry, to the rural one, where 72% of Indians live, many of them in feudal poverty.
In Badamungalaya, farmers use the e-choupal to check prices for their soya beans at the nearest government-run market, or even on the Chicago futures exchange. They look at weather forecasts. They order fertiliser and herbicide, and consult an agronomist by e-mail when their crops turn yellow. Some buy life insurance. The local shopkeeper orders salt, flour and sweets. Two wealthy villagers have even bought motorcycles. Others club together to rent tractors. School children check their exam results. “Distance has been killed,” says Mr Nagodia. The village is only about 40km (25 miles) from Madhya Pradesh's capital, Bhopal. But it is a spine-jolting journey along a dirt road.
The improbable headquarters of this operation is a wood-panelled office of colonial elegance 1,500km away in Kolkata (formerly Calcutta). In Virginia House, the 76-year-old seat of ITC, its chairman, Yogesh Deveshwar, is fired with missionary zeal. The e-choupal will “transform the rural life of India”. In May it won the inaugural “World Business Award”, for corporate do-gooders in poor countries, bestowed jointly by the International Chamber of Commerce, the United Nations Development Programme, and the Prince of Wales's business forum.
Not bad for an “imperial tobacco company”, as ITC used to be. It is one-third owned by BAT, a British tobacco behemoth. In the year ending March 31st, ITC earned 78% of its revenues and 88% of net profits from cigarettes. When Mr Deveshwar took charge in 1996, BAT was keen on “focus”. It wanted to shed peripheral businesses and concentrate on smokers. India is a promising market: most tobacco is chewed, or smoked in hand-rolled bidis. Only 13% of consumption goes on “white” cigarettes, a proportion sure to rise as India gets richer.
Mr Deveshwar, however, believes that “focus” is a developed-country fixation. Rather than excel in one business, he wants to be India's best in several: other consumer goods besides tobacco, such as flour, cooking oil, matches and salt; hotels (India, he says, has fewer upmarket hotel rooms than does Shanghai); paper, paperboard and packaging; and “agribusiness”, out of which sprang the e-choupals.
He says these, launched in 2000, will in five years time be more important to the firm than cigarettes. ITC establishes them where it is already buying agricultural produce. There are websites for each of the crops covered: soya, wheat, coffee and aquaculture (shrimp). Locations are mostly chosen from the 87% of India's 600,000 villages with under 5,000 inhabitants—typically, over 1,000 and fairly accessible. To the obvious shortages, of phone lines, electricity and literate farmers, the answers are VSAT satellite links, solar batteries and carefully chosen sanchalaks—or “conductors”—whom ITC equips with the technology.
The sanchalak is usually an educated local farmer (ideally with children soon to become computer nerds) from the dominant local caste—so some worry that such schemes reinforce local elites. He earns a commission for any ITC procurement, as well as for sales by third parties. For Badamungalaya's Mr Nogadia, it has become almost a full-time business. The farmers gain market knowledge and, if they wish, sell their product online. They can haggle better with the middlemen, who have tended to skim a huge proportion of rural revenue. And by bundling together demand, farmers can secure better prices for inputs.
Two of the big difficulties faced by the rural economy are mitigated: virtual aggregation disguises the tiny size of most landholdings; better information helps overcome the uncertainty that translates into a reluctance to spend. The possibilities are endless. Once a commercially viable way is found to put a computer in a village, there are plenty of potential users: state governments, putting their services online; consumer-goods firms, whose distribution networks rarely get to smaller villages; micro credit-providers; and so on. Mr Deveshwar's jubilation is that “we will be owners of the road!” and, of course, charge a toll.
Ketan Sampat, president of Intel India, believes that the country is “on the cusp” of a transformation wrought by rural connectivity as profound as the one that public telephone kiosks brought 10-15 years ago.
Mr Deveshwar intends to take e-choupals from the five states now covered to 15, and to reach 100,000 villages in the next decade. He is not alone. Vineet Nayar, boss of HCL, a firm that provides VSAT technology, says another two firms will roll out similar initiatives this year.
Journalists and share analysts tend to be cynical about Mr Deveshwar's motives: he is trying to embellish ITC's tobacco-stained image; or to diversify away from a product always at risk of government action—Delhi, for example, has just banned smoking in public places (though apparently without telling smokers or the police); or, perhaps, to make more farmers rich enough to smoke cigarettes. But as with all great ideas, the innovator's motive is irrelevant. Mr Deveshwar can afford to scoff at the cynics: “We are building a cathedral. They see us chipping away at the stone, and wonder at such a wasteful activity.”