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For software services, India has Wipro and Infosys, for social enterprises, India in general proudly present 2 “champions” promoted by big companies and worldwide renowned : HUL Shakti  and ITC E-choupal.
Shakti has already been presented. Let’s talk today of E-Choupal, that became famous worldwide since CK Prahlad presented it in his book “The Fortune at the Bottom of the Pyramid”. What a program !

Hopefully, Smart Manager (November-december 2008 edition), made a comprehensive article about this experimentation, in the framework of a mission to fuel innovation in India by the Innovation for India-Marico Foundation.

All begin in 1999 in the International Business Division (IBD) of the Indian Tobacco Company (ITC), a 300 crore Rs (app. 50M(e)) company, researching solutions to survive in it tough competitive environment. The long process that leaded to the launching of E-choupal was driven by Sivakumar, then at the head of IBD.
In their commodity training business, he first figured out with his managers how to find a new way to make business. “They began to look outside of their industries, and challenges everything they had so far taken for granted”. They were evolving in a very hard trading industries, with 3 big competitors (Cargill, Mitsubishi and ConAgra). Their first proposition was about CRM, to understand the needs of customers. To meet these opportunities, IBD had to deliver on quantity and quality specifications, and needed for that better control over its supply chain. In addition, IBD developed risk and knowledge management specific tools, adapted to their needs.
To hold all this parts together, ITC decided to conceive E-choupal as a supply chain management system, reaching right up to the primary producer, the farmer. But working directly with the end producer is not a simple challenge. There are hardly any large farms in India. The vas majority are small holdings of just a few hectares, and there are 130 millions farmers in India !
Commodity market in India is based on the village mandi system, where producers or middlemen bring in the produce to be sold. Under this system, the farmer can’t sell directly to a private party. Moreover, the intermediaries block information flow to the farmer. The farmes can only know the price at a particular mandi on a particular day. And they have to bring their perishable merchandise to this mandi to know the price ! Concretely, they can’t go back and see an other one. They are stuck !
The great idea of E-Choupal was to invent a new business model, farmer centric, co-build with it clients, without avoiding the intermediaries, and using existing infrastructures. Selco has a similar approach while he delivers solar panel with new value proposition, through the support of regional banks already implemented.
By bringing information and knowledge directly to the farmer, the intermediary’s hold is reduced, but he continues to make money on the volume he handled.
Then, IT came in ! In an e-commerce mela, Sivakumar met Tata Consultancy Services, that just realized experimental intranet for markets in Hyderabad. That IT input could bring scale !
Everywhere, a locally trusted farmer was invited to become the Sanchalak or coordinator acting as the interface between the ITC and the farming community. He hosted the computer. Farmers from the village and neighboring could then come to asses prices for their crops, understanding real time global rates as well as prices that ITC was offering. The commission agents (previous intermediaries) would be incorporated as collaborators (samyojaks). Their main role would be to identify potential sanchalak in villages, handle logistics of procurement, storage, bagging, transportation and paperwork… for a 0,5% commission.
Technically speaking, “the e-choupal is a web portal in the local language and PCs with Internet access placed in villages to create a two way channel between ITC and the villagers. A set of websites provides the farmers with information on best practices and prevailing prices in local and international markets”. Farmers can ask ITC about farming practices and also sell their products to ITC through the system. Each e-choupal is equipped with a PC with Internet connectivity (or Vsat if needed, printer and UPS. A solar panel is also provided, in case the power supply is erratic.
By helping the farmer identify and control his inputs and farming practices and by paying more for better quality, ITC is able to improve the quality of produce that it purchases. That’s their new differenciator ! Moreover, ITC is now able to customize its products to local tastes, and to identify sources of inputs currently.
As an extra, the e-choupal network is also used to sell ITC and third-party products to the villages. It is also being used to provide services such as rural market research to those interested. And, soon, e-choupal could provided IT enabled services, like health advisories, education and e-governance.
People were free to experiment, develop new ideas, as Sivakumar wanted it to be.
All technological and economical issues have been addressed with farmers, that are at the origin of the main innovations. If there are too many power supply issues, e-choupal provide solar panel, if there are too bad internet connection, they provide satellite, and if there are both, a “mobile e-choupal”, in fact a Toyota Qualis go on one e-choupal and bring the information to the next village !

The business impact is huge : turnover has grown from 300 crore roupies to 2000 crore roupies, as well as profits. There are currently 5300 e choupals covering 33000 villages and over 3 millions farmers. IBD is adding six new choupals every day, and the intent is to reach 100 000 villages in 15 stages. Rural malls (choupal sagars) could also be implemented, to serve a farming community needs. A new retail channel selling everything from tractors to tooth-pastes.