With entrepreneurship penetrating every sector of the Indian market, rural India is not far behind.
In fact, the government, NGOs and the private sector unanimously agree that rural entrepreneurship = rural development. For the government and the NGOs, this is possibly the best way to uplift the rural community, and for the corporates, it provides value addition by giving them the opportunity to reach into remote areas.
There are a number of platforms in the urban areas that have a positive impact on the entrepreneurial environment – there are investors who are looking out for that one great idea that deserves their money; and there are networking events, where various entrepreneurs come together to understand various business models, and to discuss their own. A quick glance at the rural market, in comparison, shows that though entrepreneurship is headed in the right direction, there is still a long way to go.
The most critical factor in this context is the availability of viable and sustainable investment opportunities, and the lack of communication facilities in remote areas. The most common businesses that are initiated are those that are started by external groups, and entail textile production, agri-tourism, small retail businesses, craftsmanship etc. However, even though the NGOs and government bodies have collaborated to establish self-help groups to alleviate rural poverty, the lack of confidence amongst most of the rural population has proved to be a deterrent to the idea of innovative rural entrepreneurship.
Some of the main issues that the rural community faces while setting up their unique businesses include lack of knowledge about profit yielding industries, and of access to capital. Limited knowledge and experience about the resources available to build their business has also stopped the already apprehensive rural community to embrace the spirit of entrepreneurship.
I’d like to give a couple of examples of successful rural entrepreneurship – one that is led by Unilever, and the other which is a self-driven initiative by an individual in Tamil Nadu. Unilever connects self-help groups with business opportunities through Project Shakti. It specifically gives the women groups a chance to become small-scale sellers of its products, wherein each entrepreneur buys a small stock of items that are then sold direct to consumers in their homes. In association with the local district authorities, Unilever also provides free training on the basics of business management and sales. Piloted in 2002, Project Shakti saw immense popularity with more than 45,000 entrepreneurs covering 3 million homes in 100,000 villages in 15 states in India.
The other interesting instance is about a rural entrepreneur: T.Mariappan, a banana grower in a village close to Tiruchi, who designed a banana dehydrator by trial and error method, to produce a type of sweet from the fruit. Impressed by what Mr. Mariappan had to offer, the Indian Overseas Bank has sanctioned Rs. 11 lakh for his project. Currently marketing the produce in 400-kg packs and in sachets, the rural entrepreneur’s future plan is to use a solar energy-operated dehydrator for large-scale production.
According to a report by Food and Agriculture Organization (FAO) on entrepreneurship;
“From the perspective of the process of entrepreneurship, whether the location is urban, semi-rural or rural, is not important in itself. For example, the needs of a would be entrepreneur or an existing small business do not differ much from those in an urban area. To realise their entrepreneurial ideas or to grow and sustain in business, they all need access to capital, labour, markets and good management skills. What differs is the availability of markets for other inputs.”
And it is exactly this gap that needs to be filled if the rural entrepreneurs are to walk shoulder-to-shoulder with urban entrepreneurs.
Published by Vasundhara Mudgil in The Microtelecom Revolution Blog
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With the urban spirits down and low (largely because they have reached a saturation point, and partly due to the credit crunch), the next phase of development in India will come from the tier II cities and the rural parts of the country.
Whether it’s the retail, banking or telecom sector, everyone has their eyes glued on the next billion users of their facilities and services.
So what is fuelling this phenomenal growth? Micro finance. Two simple words that promise to change the rural landscape.
Let’s begin with telecom itself, where close to 60% growth is expected from rural India. By collaborating with micro finance institutions (MFIs), telecom operators, and equipment and handset manufacturers are helping benefit the self employed population in Indian villages. Anytime, anywhere connectivity now enables rural entrepreneurs to deliver their services on call.
More specifically, rural entrepreneurs have chosen to use credit provided by MFIs to start their own ventures or to become associated with established corporates that aim to reach the rural hinterland through local partnerships.
In the last couple of years, banks such as ICICI have also made headlines for reaching out to the rural customers through its customized loan portfolio. Microfinance is seen as a mutually profitable venture that provides new business opportunities for banks, and opens up new avenues of opportunities for the rural banking customer. For example, the Financial Information Network and Operations (FINO), in association with the World Bank, is expected to run pilot projects with microfinance institutions, banks and government agencies to make use of IT in rural banking.
To ensure that microfinance is successfully implemented, it is also important for rural bankers to understand its true role. In fact, in Philippines, there are foreign-funded programs that aim to teach the rural bankers how to effectively design their microbanking-related business.
Anticipating the retail boom in the country, various agri-business consultancies and big names in the retail sector have opened the doors to microfinancing and are inviting people from rural regions to join them in taking the business of retail to hinterland. Apparently, Reliance Retail is eyeing partnerships with existing MFIs as part of its supply chain with rural and semi-urban markets. Retail biggie Bharti is also believed to have shown interest in exploring the MFI route for supporting the retail supply chain, contract farming operations and dairy sourcing.
There are as many opportunities in the rural sector, as there are industries in our country. With external factors such as the sub-prime crisis affecting our bread and butter, perhaps focusing on our internal strengths and opportunities is a good option!
Published by Vasundhara Mudgil in The Microtelecom Revolution Blog
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Mobile operators demand that the Indian government maintains diesel subsidies, underlining that telecom is a public utility and higher fuel costs impacts the consumers.
Business Line reports that “Cellular Operators Association of India and the Association of Unified Telecom Service Providers of India are planning to approach the Government seeking a total exemption or only a marginal increase in diesel price…”
Why? Because power costs are astronomically high; “…cellular operators spend nearly 35 per cent of their operational expenditure on procuring diesel for running generator sets that power their base stations”.
Since mobile infrastructure equipment has high power demands, it is impossible to deploy it without power support in areas where electricity is scarce. This means diesel generators are so far the only solution to provide coverage.
The need for diesel generators holds true for both urban and rural areas – multiple daily power cuts are commonplace in Indian metros, and basically all sites are equipped with generators that run several hours every day. In fact, it’s not uncommon for these generators to run 24/7/365, since shutting down and powering up a generator wears more (and costs more) than leaving it running.
So, while providing mobile coverage to everyone is a top priority, and telecom is truly a public utility, is the solution really to deploy more traditional, power-hungry mobile infrastructure?
From the article:
“…Some companies even deploy helicopters to transport diesel to remote places in order to keep the mobile networks running.”
Clearly, this is not a sustainable practice. And besides the high cost of fossil fuel, the environmental impact is enormous. According to our estimates, Indian mobile operators burn upwards of 2 billion litres of diesel every year, just to power diesel gensets. This translates to 5,24 billion kilogrammes - 5,24 million metric tonnes - of carbon dioxide emitted every year.
There’s a dire need for mass deployment of renewable energy sources and sustainable technology. But clean energy is only one part of the picture.
As we’ve previously underscored, rolling out mobile networks in rural and remote areas requires a complete re-engineering of technology, business models and approach. The solution is actually to let profitability and sustainability go hand in hand.
Quoting Thich Nhat Hanh from yesterday’s Times of India;
“Protecting the environment is protecting ourselves”
The case for WorldGSM™ has never been stronger.
Published by Pär Almqvist in The Microtelecom Revolution Blog
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GSMA’s latest initiative pushes for the use of renewable energy sources for mobile networks.
The target is to have 100,000+ off-grid base stations deployed by 2012. As a regular reader of the VNL blog, you should be quite familiar with the large power and fuel challenge that mobile operators face.
Energy prices are soaring, while ARPU’s are dropping. The solution to these issues is to focus on energy efficiency and renewable energy sources.
With this in mind, GSMA’s effort is both very timely and highly relevant. The explosive growth in the mobile industry must be managed responsibly to avoid an enormous negative environmental impact. Especially in countries like India where more than 9 million new users are added every month and base stations are being deployed quicker than suppliers of diesel gensets can deliver. In May this year, Bharti Airtel (one of the largest mobile operators in India), claimed they were adding almost 3,000 new base station sites every month.
Pushing for the usage of renewable energy sources for mobile networks not only has the potential of reducing air pollution and mobile operators’ operating costs – because of the huge scale of the mobile industry, it can impact the whole renewable energy field; providing a live testing ground for new innovations in solar and wind power.
We applaud GSMA’s initiative. But beyond their project’s focus on renewable energy is a required re-thinking of mobile infrastructure technology – the area where VNL is singularly focused.
The next billion mobile users will come from rural areas, and to roll out mobile networks here is a unique challenge. It’s not only about using solar or wind power. And it won’t do to simply attach a large solar array to existing mobile infrastructure, since the energy requirement and cost per site simply prevents the solution from scaling. And the idea of burning a matter – be it diesel or cooking oil, or a mixture of both – to extract power is not sustainable in the long run. We’ve earlier argued against biofuels, and remain firm in our stance.
Off grid telecom, or “microtelecom” in VNL lingo, consists of four key ingredients:
With WorldGSM™ – VNL’s solar powered GSM system – all these ingredients are present. The combination allows mobile operators to finally provide mobile services to rural areas.
Profitably so. And responsibly so.
Published by Pär Almqvist in The Microtelecom Revolution Blog
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Very few advertisements have the knack of making an impact. For me, the Idea mobile ad (of educating rural children) is truly admirable for the social message it echoes.
While in urban India, cellphones are used for catching up with friends, closing business deals and connecting with our near and dear ones. In the rural scenario, mobile phones hold the potential of revolutionizing education.
In a country where the IT and telecom sectors are booming, the average literacy rate is 65%. Is there any way in which these profit-churning sectors are positively affecting the literacy levels?
Distance education is a familiar term for anyone who has pursued their degrees over the internet from a university based out of another state or country. So what is stopping us from localizing the concept of ‘distant learning’ to the grassroot level?
Limited funding and weak infrastructure are two of the major deterrents to the growth of literacy level in rural India. Education is secondary, as schools are not always located in close vicinity, and family obligations and chores dominate the lives of rural communities (including children). Yet, education can touch the lives of those who wish to learn; technology and telecom have already joined hands to make a difference to the lives of the rural youth.
The Lifeline for Education program managed by One World aims to provide academic support to teachers in rural schools in India - using accessible communication mediums like mobile phones. The system uses simple communication protocols to facilitate education in remote regions of the country. The program is servicing 13 panchayats, 164 villages, and 571 schools (as of March 2008) in the Monteswar Block in the Bardhaman district of West Bengal.
Another alternative is for teachers, volunteers and organizations to take the onus of adopting a village and ensuring that they make a difference to the literacy rates in these areas. For example, The Times of India’s ‘Teach India’ campaign created a positive wave in urban India and saw volunteers from every walk of life come together and make a difference to the way that knowledge is shared. It is time to replicate this model in rural India and use mobile phones as a medium to reach lives untouched by the gift of education.
Research company Global Equities has projected that education could amount for 20-25% of iPhone sales in the next few years. No doubt India has a long way to go, but if the public, the corporates and the government collaborate, it is definitely a good time to start the journey.
Nobel Prize-winning economist Amartya Sen sums up the need for education in ten words: “Illiteracy and innumeracy are a greater threat to humanity than terrorism.”
Published by Vasundhara Mudgil in The Microtelecom Revolution Blog
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The evident demand for mobile phones in India has created a very interesting business and entreprenurial opportunity for the nation’s retailers – setting up mobile stores.
With the call rates and handset prices declining day by day, the mobile retail sector is creating a ripple in the Indian market. There are two segments fighting for space in this sector – retail stores backed by known corporates, and the traditional shops that rule regional India. Who will win this tussle?
“Business opportunities are like buses, there’s always another one coming”
–Richard Branson
Clearly, the advantage that regional players have is that of location; set up in the interiors of the country, these mobile retailers are able to reach the untapped target audience. More importantly, they are able to understand the psyche of their consumers, who usually come from the same geographical location. Price is also an advantage for retailers such as UniverCell, Sangeetha and Global Access, because their relatively small size allows them to change prices within two hours of the market price change; bigger stores, however, take 2-3 days to solve the issue.
In this scenario, the competition being generated by corporate-backed mobile retailers has come as a surprise to the regional players. Retail outlets such as The MobileStore (Essar and Virgin), HotSpot, Subhiksha and Mobile NXT are setting up shops countrywide. While some like HotSpot have tied up with neighbourhood stores as their franchisees, others like The MobileStore have stuck to investing in their exclusive outlets.
In a country like India, where more than 70% of the mobile retail sector is unorganized, the franchisee model seems to spell the way ahead.
As mobile penetration continues to grow in the Indian subcontinent, mobile retailers – organized & unorganized – are fighting for their share of the pie in the urban, semi-urban and rural parts of the country.
What remains to be seen is whether the struggle between the regional mobile retailers and the national mobile retailers will continue, or if they’ll come together to fulfill the demand of the next billion mobile users.
Published by Vasundhara Mudgil in The Microtelecom Revolution Blog
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9.22 million. 9,220,000. That’s how many new Indian GSM and CDMA subscribers were added in July. It breaks the earlier record of 8.94 million that was set a month earlier.
Out of all the mobile operators, Bharti Airtel expanded the most with 2.69 million. Vodafone Essar welcomed 1.7 million new subscribers, and Reliance 1.5.
Close to 300 million people now have a mobile phone in India. This makes India the world’s second largest mobile phone market after China.
The split between GSM and CDMA is currently roughly 74% vs 26%.
As new GSM operators, such as Videocon, Unitech, Reliance and Tata Telservices, start launching mobile services by the end of this year, growth is expected to grow upwards of 10 million new subscribers per month.
Rafat Ali recently wrote a blog entry about Cyriac Roeding’s (former EVP of mobile at CBS) travels in India.
He visited the spiritual city of Varanasi, and found himself standing at an intersection, observing his surroundings:
“The backdrop of this ancient scenery is dominated by a giant billboard from the mobile carrier Vodafone. And on the sidewalk, where men in wet orange T-shirts pass by after their spiritual bath in the Ganges River, a young entrepreneur has set up a booth on two wheels, which carries only two stationary telephones on a counter. This is a mobile phone recharging station, where consumers can add credit to their prepaid cell phones.”
There are many reasons for India’s mobile revolution. One of the most important is accessibility. Only a couple of million Indians - around 5% of the population - have Internet access. And getting a traditional wired phone installed is often a cumbersome process.
As it’s possible to get a new mobile phone for as low as $25, and as mobile services (voice, text messaging, data) are priced very competitively (the average country-wide ARPU lingers around $7), getting a mobile phone is the way to go.
But an enormous challenge still remains - making sure that mobile services are accessible to everyone. Which in the case of India translates to close to 400 million people - a majority located in rural areas - that still can’t use a mobile phone because there’s no coverage.
That’s where VNL’s WorldGSM™ system comes into the picture - helping operators reach rural markets profitably.
To learn more about India’s mobile market, here are some resources worth visiting:
Published by Pär Almqvist in The Microtelecom Revolution Blog
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