India


Contents

1. Introduction
1.1 Why India?
1.2 Initial Target States
2. General Country Information
2.1 Physical Environment
2.2 Population / Population Distribution
2.3 National Economy
2.4 National Government
2.5 Lighting, Electricity, and Energy
2.6 Current Government Energy Programs
3. Composite User and Regional Information
3.1 Composite User: Jyoti Mundra from Rajasthan, 42 years old
3.2 Composite User: Abhik Mittra from West Bengal, 48 years old
4. Business Context
4.1 Overarching Business Climate
4.2 Company Structure
4.3 Manufacturing
4.4 Distribution
4.5 Local Financing
4.6 Micro-Enterprise
4.7 Marketing
4.8 User-Business Relationship
4.9 Possibilities in Partnerships
5. Business Models
5.1 Overview of Business Model
5.2 Two Models Applied to India
5.3 Key Assumptions/Deliverable Specifications
6. Bibliography

1. Introduction


1.1 Why India?

India, with a large population of people who do not have access to efficient lighting, is home to many of our potential users. Eighteen thousand rural villages in India lack electricity. This automatically puts much of rural India at a disadvantage in comparison to richer parts of urban India. Lighting is useful for many things, from children being able to study at night to parents being able to make a few more crafts that they can sell for more money. Recognizing this fact, the Indian government is in the process of bringing electricity to these villages. However, it will take many years before the majority of these communities, some being located in very remote areas, can reliably be put on a grid. The government therefore hopes to bring these people efficient lights that they could use until they have access to electricity. Our LED lights, with their numerous benefits over other types of lights, can possibly be what the Indian government is looking for. India's political and economic stability, relatively strong infrastructure, and various established manufacturing centers also present a beneficial environment for a new business venture.

1.2 Initial Target States

Because the vast majority of southern India is already electrified, we initially looked to northern India for potential users. Unfortunately, many areas of northern India are currently experiencing violent social confrontations that would greatly weaken our ability to establish a basis for a successful business. Also, many areas of northern India are plagued by a poverty so deep that lighting is a trivial concern. As a result, the states of Rajasthan and West Bengal (in west and east India respectively) were chosen because of their relative social and economic stability. Though numerous people in both of these states live on less than 2 USD per day, they still have some disposable income or resources that they could use to purchase the light. Moreover, both states have relatively good transport systems for distribution.


2. General Country Information


2.1 Physical Environment

India is full of geographic and climatic diversity, with mountains, plains, rainforests, deserts, and coastal regions. This geographic diversity will provide a wide range of environments in which to test the product.

Picture

Source: www.welcometoindia.com

Notable aspects of India's climate

Sources:

  1. CIA. The CIA World Fact Book: India. http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb. 2003
  2. The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 2003
  3. Press and Information, Embassy of India. Embassy of India, Washington D.C. www.indianembassy.org. 7 Feb. 2003

2.2 Population / Population Distribution

India is home to 1 billion people. The most dense states are Delhi, Chandigrah, Daman and Diu, Lakshwadeep, and Pondicherry.

On average, rural villages are home to 1500 people.

population density in India

Source: http://www.censusindia.net/results/2001maps/gallery/map2.html

Sources:

  1. The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 2003
  2. Press and Information, Embassy of India. Embassy of India, Washington D.C. www.indianembassy.org. 7 Feb. 2003

Transportation

Sources:

  1. Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb. 2003
  2. The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 2003
  3. Press and Information, Embassy of India. Embassy of India, Washington D.C. www.indianembassy.org. 7 Feb. 2003

2.3 National Economy

India's economy is currently stable. Factors that could easily affect this stability, however, include unsuccessful harvest seasons and natural disasters. Agriculture, handicrafts, support services, and software services compose a large part of the Indian economy. Growth in the manufacturing sector slowed in 2001.

General Statistics:

Income Levels and Poverty:

With over a quarter of the world's poor concentrated in India, poverty is the government's biggest priority.

Sources:

  1. CIA. The CIA World Fact Book: India. http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb. 2003
  2. Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb. 2003
  3. Press and Information, Embassy of India. Embassy of India, Washington D.C. www.indianembassy.org. 7 Feb. 2003
  4. The World Bank. India Data Profile. http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=IND&CCODE=IND&CNAME=India&PTYPE=CP. 7 Feb. 2003

2.4 National Government

Sources:

  1. CIA. The CIA World Fact Book: India. http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb. 2003.
  2. Transparency International Corruption Index. Transparency.org. http://www.transparency.org/cpi/2002/cpi2002.en.html. 7 Feb. 2003.
  3. IndianChild.com. http://www.indianchild.com/indian_economy.htm. 7 Feb. 2003.

2.5 Lighting, Electricity, and Energy

India has one of the world's largest programs for renewable energy. According to Indian researchers, there is a huge untapped potential for renewable energy in India, and they are working to achieve that full potential. New sources of energy have been rapidly accepted by rural people.

Current available power sources in India include power grids, solar power, hydro power, gasoline, and coal.

Access to Electricity

Costs of Lighting

Energy Sources

Sources:

  1. "Energy." India Information, Embassy of India 2000. <http://www.indiaembassy.org/indiainfo/india_2000/chapters/chp22.pdf> 17 Feb. 2003
  2. "Energy Strategies for Rural India: Evidence from Six States." Joint UNDP/ World Bank Energy Sector Management Assistance Programme. Aug. 2002 <http://www.worldbank.org/html/fpd/esmap/pdfs/258-02_intro.pdf> 2 March 2003
  3. Malhorta, Preeti and Shandari, Preety. "Rural Energy Development in India." TERI 2002

2.6 Current Government Energy Programs

The following are projects that demonstrate the Indian government's interest in renewable energy technology for the power sector. Potential partnerships with current government projects could be invaluable in easing the distribution and sale of LED lighting systems providing insight into how to successfully reach the impoverished.

The Power for All Initiative:

The Renewable Energy Policy Act (currently before the Indian Parliament):

Sources:

  1. Prime Minister's Office. http://pmindia.nic.in/home.htm. 7 February 2003.

3. Composite User and Regional Information


grain harvest in tilonia, rajasthan

Grain Harvest in Rajasthan
Source: http://biology.queensu.ca/~arnoldh/raj%20tilonia%20fields.jpg

rajasthan woman

Source: http://biology.queensu.ca/~arnoldh/raj%20woman%20in%20field.jpg

3.1 Composite User: Jyoti Mundra from Rajasthan, 42 years old

Jyoti lives in Bharatpur in the eastern part of Rajasthan. Most villages in her district have electricity but hers does not. She is married, has 5 kids. Her 2 brothers died a few years ago. She currently lives with her husband's mother, his mother's 2 unmarried sisters, her husband, his brother, her niece and nephew, and her own two children. She has no concept of privacy or personal space; everyone in the family knows each other's businesses.

Jyoti's family owns a camel which she rides to larger villages to get daily goods such as soap and vegetables. Her family grows wheat, but the monsoon rains are a constant source of worry. If the rains are too light, the harvest will be low and the dry season will be hard for the family. She never went to school and is illiterate, but she sends her kids to the government school, despite expensive fees. She lives in a mud house with a thatched roof. Every day she walks an hour to get water from the well. But in the dry season, the well dries up and she has to travel even further to get water. She hopes her children will get good jobs in Jaipur. She would like to have a gas stove. She spends 13 rupees on kerosene per month.

Insights

Environment in Rajasthan

Living Conditions
Infrastructure
Electricity

Economic and Political Conditions in Rajasthan

Politics
Economics

Social Structure in Rajasthan

Education
Religion
Use of Light
Receptiveness to Technology
Aspirations

Sources:

  1. Center for Consumer Action Research and Training. http://cuts.org/cart-power-er-dev-abu.htm. 7 March 2003
  2. Embassy of India, Washington D.C. http://www.indianembassy.org/indiaingo/india_2000/chapters/chp17.pdf. 7 March 2003
  3. The Hindu. http://hinduonnet.com/thehindu/2001/03/04/stories/1404221e.htm. 7 March 2003
  4. IndiaStat.com. www.indiastat.com. 7 March 2003
  5. IndiaTogeter.Org. http://www.indiatogether.org/govt/ocal/articles/arc-rahasthan.htm. 7 March 2003
  6. Pegu, Rink. The Week. "Packing a Punch." http://www.the-week.com/99nov21/events2.htm. 7 March 2003
  7. Rajasthan Travel Tours. http://www.rajasthan-travel-tours.com/rajasthan-climate/. 7 March 2003
  8. United Nations Development Programmme. "Chasing a Right." http://www.undp.org/governance/docsaccess/chasing_a_right.pdf. 7 March 2003
  9. Vetwork UK. http://www.vetwork.org.uk/ilsel.htm. 7 March 2003
  10. The World Bank Group. "Poverty Net." http://poverty.worldbank.org/library/view/10203. 7 March 2003

3.2 Composite User: Abhik Mittra from West Bengal, 48 years old

Abhik lives with his forty year old wife, Indra, in the village of Kandi, located in the West Bengal state. The two have four children - three girls and one boy. The village in which they live lacks electricity and other basic utilities. Abhik and his family live in a semi-permanent thatched-roof house made of mud. It is supported by bamboo rods and has a dirt floor, which Indra has a hard time keeping clean. Like the other villagers, Abhik is a subsistence rice farmer who lives on a day-to-day basis. The little money he does make he gets in spurts based on the harvest season.

Abhik is especially worried about money these days because he needs to pay his daughters’ dowries. Abhik was fortunate enough to gather enough money to provide dowry for his eldest daughter, age twenty, to marry a local farmer. Abhik still has two other daughters, age nineteen and seventeen, for which he has to secure dowries. Abhik also has one son, who is the youngest at age fourteen. Because he is their only son, Abhik and Indra are trying hard to keep him in school for the longest period of time that they can afford. Abhik and Indra were able to send their daughters to school until age twelve, but they are hoping to keep their son in school for another year until he turns fifteen. They are very proud of their children’s education, because they themselves are both illiterate. They were unable to keep their daughters in school for a longer period of time because they were needed at home to help with the household and field work.

Abhik’s mother also lives with the family. She is sixty-five years old. Her husband (Abhik’s father) died nine years ago. Besides their four children, Abhik and Indra also had two other children who died at childbirth.

Indra spends a large portion of her time gathering wood for the cooking stove. Because all her daughters will soon be married away, she will no longer have help with this task. Since the village in which Indra and Abhik live is not connected to the electrical grid, they must use kerosene for their lighting needs. Abhik spends about 37 rupees per month on kerosene, which is about 3% of his monthly income. He tries to use it very sparingly, and he mainly uses it when he needs to fix his farming tools at night. Lately, Abhik and Indra have also been very concerned about their water supply, because there has been an outbreak of arsenic poisoning in the ground water. Unfortunately, they do not have enough money to buy bottled water. As it is, they barely have enough to eat.

Insights:

Environment in West Bengal

Location

West Bengal borders Bangladesh, Bhutan, and Nepal.

Population
Climate and Geography

West Bengal has a diverse geography, with the Himalyas in the north and plains in the south. On the plains, the monsoon season runs from June to September bringing floods and mudslides with it. Before monsoon season, this area is typically very dry. The state provides a great range of temperatures and climates in which to test the ruggedness of our product, with snow in the mountainous regions and hot, humid summers in the southern region.

Living Conditions

Economic Conditions in West Bengal

The most common occupation is agriculture. Rice is a particularly profitable crop in parts of the state. Many people also make crafts (jewelry, rugs, baskets) to sell on the streets of cities.

A typical farmer's wage would be around 14,800 Rupees/ year (310 USD).

Social Structure in West Bengal

Family
Health
Education
Religion
Use of Light

Sources:

  1. Dasgupta, Sourav and Sudeshna Dasgupta. "Bengal Web." http://www.bengalweb.com/intro/wbengeo3.html. 9 March 2003
  2. IndiaChild. "Indian Villages." http://www.indianchild.com/indian_villages.htm. 9 March 2003
  3. Israel, Samuel ed. Crafts of West Bengal. Grantha Coporation: Middletown, New Jersey, 1994.
  4. National Family Health Survey, 1998-1999. International Institute for Population Sciences: Mumbai, 2001
  5. World Bank, 2001 http://www.rnw.nl/humanrights/html/09_march_1999.html

4. Business Context


4.1 Overarching Business Climate

India has a strong entrepreneurial climate. Almost all transactions take place on a local level by small shopowners. People are willing to take risks if they have access to the appropriate financing.

There are two types of ventures that foreign investors who want to do business in India can undertake:

It is in our best interest to do a joint venture.

4.2 Company Structure

Regardless of our company organization in India, we will need an international structure that determines how our organization behaves.

If Light Up the World continued to perform the following core duties, it would be an international financial organization that deals with suppliers and with its domestic partners around the world:

  1. Dealing with suppliers (LED manufacturers, raw materials providers, electrical component manufacturers) to leverage buying in bulk
  2. International financials: fundraising, assisting subsidiaries, diverting resources from a successful venture to other projects in other countries as necessary.
business structure

Such a model makes Light Up The World a hub for materials, resources, and information that all domestic subsidiaries can utilize when necessary. The amount of support Light Up The World will provide its subsidiaries and the support these subsidiaries will provide their regional departments is yet to be determined. However, it is quite possible that the subsidiary will provide regional departments with technical, financial, and market expertise and that the regional department will provide the subsidiary with working knowledge of the people in that region and a labor force to deploy the product. Ideally, the regional departments would also stimulate some form of local microenterprise.

4.3 Manufacturing

It is unclear whether or not it would be beneficial to manufacture in India. While at first India may seem to have a favorable manufacturing environment, the World Bank notes numerous reasons why foreign investors sometimes shy away from India.

Benefits of manufacturing in India:

Drawbacks of manufacturing in India:

4.4 Distribution

India has an extensive rail network, and a strong road infrastructure that is constantly growing. Villages are short distances apart from one another. The government has extensive distribution network in place. For locales near cities, there is a constant flow of goods between the city and village. For more rural or remote areas, there is a strong distribution network available through the existing structure established for cooking fuels.

Possible Methods of Distribution:

4.5 Local Financing

There are a number of organizations that perform micro-financing in India. Partnering with these established and reputable micro-lenders would probably be the easiest and best way to create local financing for our project.

MFI's in India:

4.6 Micro-Enterprise

There is a strong entrepreneurial climate in India so working with local entrepreneurs will not be a problem. Providing start-up capital and resources, such as training on how to operate and run a profitable business, will be required of us, however.

4.7 Marketing

We are only in charge of marketing if we do a partnership or have a central sales force; the government will do their own marketing.

Current Methods of Information Dispersal to Rural/Remote Villages

4.8 User-Business Relationship

Traditionally after the product is sold, few services are provided. Many people fix things themselves or call someone they know for assistance. However, it would be most useful to them if we provided the following continued services.

4.9 Possibilities in Partnerships

Any successful business plan must create lasting, meaningful partnerships to maximize the resources of existing organization.

Specific Potential Partners

Sources:

  1. Indian Department for Industrial Promotion. http://dipp.nic.in/. 8 March 2003
  2. Personal Interviews. Achal Garg
  3. Personal Interviews. Akhil Gupta
  4. Press and Information, Embassy of India. Embassy of India, Washington D.C. www.indianembassy.org. 9 March 2003
  5. World Bank, Confederation of Indian Industry. "Competitiveness of Indian Manufacturing: Results from a Firm-Level Survey." January 2002. http://lnweb18.worldbank.org/sar/sa.nsf/Attachments/wbcii/$File/FACSReport.pdf

5. Business Models


Based on the previous section's description of the business climate and our understanding of our users, we have generated two business models that we feel would be successful in India. In addition to the Crafts for Lights Model and the Light Technician model, we will briefly assess the feasibility of numerous other models.

5.1 Overview of Business Model

Light Up the World (LUTW):

Light Up the World will determine the quality of the product and ensure that that quality is maintained. They will also manage the international supply chain, negotiate discounts from manufacturers/suppliers, and manage the direction of international funds for new projects from established, already successful branches of the organization.

India Headquarters:

The India Headquarters can be a branch created by LUTW or it can be a partner in India. The regional headquarters would be responsible for manufacturing, distribution, and marketing in India.

Manufacturing

As previously stated, more research is necessary to determine whether or not it would be wise to manufacture our product in India.

5.2 Two Models Applied to India

Lights for Goods Model

By utilizing the skills of local artisans, we can promote local culture and generate sufficient income through selling the local art on the international market.

Manufacturing

All lights will be manufactured and assembled in one location to ensure quality control.

Distribution

Our agents will directly distribute these lights to the craftspeople that will take the units with them to distribute. Thus the selection process for our craftspeople and distribution is accomplished at once. Since there will also be technicians to service these lights, we could utilize the Maintenance Woman Model here

Assumptions
Strengths of the Lights for Goods Model in India
Weaknesses of the Lights for Goods Model in India

Light Technician Model

This model is both self-sufficient and can be incorporated into other models. The servicing/maintenance aspect can be extracted and used independently of the complete model below, which also incorporates sales and marketing for the microenterprise.

Manufacturing

All lights will be manufactured and assembled in one location to ensure quality control -- either at a factory or perhaps at a training school.

Distribution

For villages near urban centers, LUTW will ship ready-made lights to a central office in the city and have the women come get it from us. For more remote villages, the units will be shipped to the closest city and then sent to the villages by utilizing existing cooking fuel distribution networks.

Assumptions:
Strengths:
Problem areas

5.3 Key Assumptions/Deliverable Specifications

General Numbers

Income
Lighting Unit

Cost to produce one unit: $25.50

Lights for Goods Model

Start-Up Investment
Micro-Enterprise Revenue
Maintenance Revenue

This model hinges on us being able to dispose of all this artwork. The influx of artwork makes the scalability of this model somewhat questionable. If we can create a market for the artwork or sell it directly to resellers, we can quickly recover our investments.

Light Technician Model

It is important to note that though we are buying lights back at $15 per light, we can reuse the LEDs, PV components, casing, and other functioning components. This will be a great saving to us because all we need to do is replace the malfunctioning components, and thereby create a light for even cheaper than the original $25 price.

Maintenance Revenue
Micro-Enterprise Revenue
Miscellaneous Costs to LUTW from One Light Technician

Sources:

  1. Indian Department for Industrial Promotion. http://dipp.nic.in/. 8 March 2003
  2. Personal Interviews. Achal Garg
  3. Personal Interviews. Akhil Gupta
  4. Press and Information, Embassy of India. Embassy of India, Washington D.C. www.indianembassy.org. 9 March 2003

6. Bibliography


Section 2: General Country Information

Section 3: Local User Demographics

Section 4: Business Context

Section 5: Business Model

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