8/18/2014 Chairman Y C Deveshwar speaks on the e-Choupal

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..:: Chairman Y C Deveshwar speaks on the e-Choupal ::..

ITC: Leveraging IT for Rural Transformation

ITC is engaged in imparting a revolutionary dimension to its rural partnership byleveraging information technology to elevate the Indian farmer to a new order ofempowerment. ITC's 'e-choupal' initiative is a powerful illustration of the potentialof information technology to transform rural economics, notwithstanding thestructure and size of land holdings in India.

This alternative model leverages information technology:

To deliver real-time information and customised knowledge to improve

farmers' decision making ability, and thereby better align farm output to

market demands and secure better quality, productivity and improved

price discovery

To aggregate demand in the nature of a virtual producers' cooperative and thereby access higher

quality farm inputs and knowledge at lower cost and

To set up a direct marketing channel virtually linked to the mandi system for the purpose of price

discovery, yet eliminating wasteful intermediation and multiple handling, thus reducing transaction

costs and making logistics efficient.

This model, in facilitating a direct marketing channel in competition with the existing mandi system, is inconformity with the reforms recommended by the Shankarlal Guru Committee appointed by the Ministryof Agriculture. Besides inducing efficiency of the mandi channel through competition, this alternativechannel will also serve to conserve public resources that would otherwise be required for the expansionand upgradation of the mandi infrastructure. This digital infrastructure can also be used for channelisingservices related to credit, insurance, health, education and entertainment, in addition to serving as astrong foundation for creating a vibrant futures market to facilitate farmer risk management.

This model thus enables a quantum improvement in the cost and quality of extension services.In the conventional model the effectiveness of extension service is severely limited by thecapability of the individual extension worker. The e-choupal model, on the other hand, confersthe power of expert knowledge on even the smallest of individual farmers.

ITC's investment in such an e-infrastructure, whilst creating abiding value for the farmer, is in turn placingthe Company in a unique position of trust with the farming community as a reliable supplier of goods andservices on the one hand, and as a buyer of high quality, cost effective farm output on the other, therebysupporting its own competitiveness.

The task of adapting the e-choupal concept for different crops and regions continues to test yourCompany's entrepreneurial capabilities. In addition to special commercial circumstances obtaining ineach case, there are many constraints like infrastructural inadequacies, including power supply, telecomconnectivity and bandwidth, apart from the challenge of imparting skills to first-time internet users inremote areas of rural India. The potential benefits of this project have spurred ITC to seek innovativesolutions to overcome constraints.

Competitiveness of Indian agriculture induced through such a market-led business model, can trigger avirtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management,leading to higher order investments, feeding even higher levels of quality and productivity. Growth in ruralincomes would also unleash the latent demand for industrial goods so necessary for continued growth of

8/18/2014 Chairman Y C Deveshwar speaks on the e-Choupal

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the Indian economy. Over time this will create another virtuous cycle, snowballing the economy into ahigher growth trajectory. This model, with appropriate modifications, can be extended to other facets ofagriculture like floriculture, sericulture, horticulture, aqua farming, poultry farming, animal husbandry etc.

International competitiveness can thus be engendered wherever it is feasible to create a structurewhereby the corporate sector's need for creating shareholder value can be enmeshed with that of thefarming community in a mutually supportive, interlocking and interdependent partnership.

Starting with just 6 choupals in June 2000, this ITC model has already become rural India's largestinternet-based initiative, covering over 1900 choupals linking 11,000 villages and serving over 1.2 millionfarmers by April 2003. ITC's objective over the next decade is to create a low-cost IT-based interactivetransaction and fulfilment channel to cover 100,000 villages, representing 1/6th of India's villages,reaching out to millions of farmers.

The challenge of uplifting rural India towards prosperity is so vast that many, many more corporateplayers are required to participate in such value adding rural initiatives to supplement Governmentaleffort. The benefits of rural initiatives tend to be back-ended, thereby stretching corporate resources. Onecannot expect everyone to be fired by passion alone. In order to mobilise wider participation of the privatesector in similar endeavour, Governments, Centre and State, can play a catalytic role by crafting anurturing policy framework.