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Fuelling latent rural demand
Economic Times - 07 Jul 2006

ITC’S e-choupal, a universal platform for rural India, is a very successful case study taught at Harvard and Michigan Schools. Management gurus CK Prahalad and Venkat Swami cite the e-choupal example to explain co-creation. Almost every other day, an ITC executive is making a presentation on this initiative somewhere in the world. The initiative has won the Stockholm Challenge award apart from several others.

What was conceived as an effective supply chain delivery for its agri commodity business soon evolved into a universal platform for rural India with a basket of goods, services and most critical of all, information access. All these have capabilities to bring about life-altering changes. The e-choupal model has helped to meet challenges posed by Indian agriculture, characterised by fragmented farms, weak infrastructure and the involvement of numerous intermediaries.

Today, the platform literally connects rural India to the world. It gives the farmer access to weather reports customised for his region, lends best farming practices, provides goods and services like farm implements, fertilisers to banking and insurance products at his doorstep. And the basket of services continues to expand.

The problems encountered by ITC in setting up and managing these echoupals included inadequacies in power supply, telecom connectivity and bandwidth. Resistance from middlemen and imparting skills to firsttime internet users in remote areas were the other difficulties. ITC (agri business division) CEO S Sivakumar, who is the chief architect of the echoupal project, said: “The challenge now is to sustain this innovation.”

The scope of e-choupal has gone way beyond its blueprint like Choupal Sagar, the rural retail chain, which was not part of the original plan. Going forward, the role and shape of echoupal will continue to evolve in line with the ideations of the e-choupal community of end-users itself, he added. In the future, services like health, education and business process outsourcing could be added to the e-choupal ambit. Mr Sivakumar chose to call the e-choupal a business initiative with a social collateral. The echoupal, which has witnessed capex of Rs 200 crore and revenue expenditure of Rs 150 crore, could see outlays of Rs 5,000 crore over the next five to seven years.

Unlike a traditional organisation where the top management is the visionary and junior management executes the mission, the e-choupal community of 40,000 frontline beneficiaries and end users work together. New business models and services have been added to the basket as a result of an unmet need expressed by the community.

ITC’s key role is to provide ‘orchestration infrastructure’ or synthesising these experiments. Mr Sivakumar said the e-choupal essentially works on four pillars of digital infrastructure (IT, internet access), physical infrastructure (Choupal Sagars), human infrastructure (sanchalaks and sanyojaks) and network orchestration by ITC. As an intermediary, ITC has brought a network of insurance companies, banks, micro-finance entities, seed and fertiliser companies, FMCG, elearning and training organisations to the doorstep of rural India.

Launched in June 2000, e-choupal is largest initiative among all internetbased interventions in rural India. Its services reach out to over 3.5 million farmers growing a wide range of crops — soyabean, coffee, wheat, rice, pulses, shrimp — in over 31,000 villages through 5,200 kiosks across six states of Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh, Maharashtra and Rajasthan.