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.
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.
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.
Source: www.welcometoindia.com
Notable aspects of India's climate
- Monsoons affect east and southwest India from June to October. Flooding
is common during these months. In these areas, photovoltaics would not be
the best source of energy; other options such as mechanical sources of
energy should be considered.
- There is a great amount of humidity in India, particularly along the
coast, and 73% of the country experiences a "medium" amount of rainfall.
The product and energy sources should be designed for a wet
environment.
- Many parts of India lie near fault lines. If the product is a stable,
indoor light, it should be set up in such a manner that it will not hurt
people during an earthquake.
- In the arid areas of northwest India, the product should be able to
with stand temperatures over 100 degrees Fahrenheit.
Sources:
- CIA. The CIA World Fact Book: India.
http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb.
2003
- The Fix. Welcome to
India. www.welcometoindia.com. 3 Feb. 2003
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 7 Feb. 2003
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.
Source:
http://www.censusindia.net/results/2001maps/gallery/map2.html
Sources:
- The Fix. Welcome to
India. www.welcometoindia.com. 3 Feb. 2003
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 7 Feb. 2003
Transportation
- On average, villages are only 2.5 km apart.
- About 50% of roads are paved, depending on region.
- Railways are the principle mode of transportation for both freight and
passengers; due to heavy demand by industries, the government is working
to improve the existing network.
- Air India Limited is the major International carrier of the country
(flies to US and almost everywhere else). Indian Airlines is the major
domestic air carrier of the country. It operates 57 domestic stations and
17 international stations in Asia.
Sources:
- Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb.
2003
- The Fix. Welcome to
India. www.welcometoindia.com. 3 Feb. 2003
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 7 Feb. 2003
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:
- Debt Classification: less-indebted (World Bank, 2001)
- Exchange rate: 48.336 rupees / US dollar
- GDP growth: 5%
- Inflation: 4% (World Bank, 2001)
- Purchasing Power Parity: $2.5 trillion
Income Levels and Poverty:
With over a quarter of the world's poor concentrated in India, poverty is
the government's biggest priority.
- Classified as a "low income" country by the World Bank with a GNI
(gross national income) of $450.
- Great inequality in the distribution of wealth: the richest tenth of
households hold 33% of wealth, while the poorest tenth only hold 3%
- 29% of the population lives below the poverty line; 70% of these people
reside in rural areas
86% of the population lives under $2 per day; 44% lives under $1 per
day
- 25% of the population does not have enough money to eat adequately
- Because of the high levels of poverty in the countryside, huge numbers
of migrants are flocking to the cities in search of a job and a better
life. The cities cannot support this swelling much longer, meaning that
rural living must be improved to retain people.
Sources:
- CIA. The CIA World Fact Book: India.
http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb.
2003
- Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb.
2003
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 7 Feb. 2003
- The World Bank. India Data Profile.
http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=IND&CCODE=IND&CNAME=India&PTYPE=CP.
7 Feb. 2003
- The Indian government is a representative democracy, with a separation
of executive, legislative, and judicial powers. Elected in 1998, the
prime minister is Atal Bihari Vajpayee. The government is stable: there
have been no major coups since 1947.
- Challenges we will face when implementing any business plan include
cronyism, and corruption within the regulatory bodies and judicial
system. In 2002, the international monitoring organization, Transparency
International, rated the corruption of the Indian government as 2.7 on a
scale of 10, with 10 being the least corrupt. Furthermore, government
bureaucracy is extensive, and any business faces numerous inspections
from tax agencies and safety regulators. It is important to note that the
government shows preference to businesses with a long history in India
and to Indian-owed companies.
- The government is a major employer in many areas of India due to little
private investment. It consumed 10% of India's GDP in 1996. It provides
the majority of investments in the science and technology sectors,
particularly in the areas of defense, nuclear science, space, and
agriculture.
Sources:
- CIA. The CIA World Fact Book: India.
http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb.
2003.
- Transparency International Corruption Index. Transparency.org.
http://www.transparency.org/cpi/2002/cpi2002.en.html. 7 Feb. 2003.
- IndianChild.com. http://www.indianchild.com/indian_economy.htm. 7 Feb.
2003.
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
- Electrical consumption per capita is 363 kWh (growing), compared to
11,822 kWh in the US. (all figures below: TERI, 2002)
- 80,000 villages are not connected to the grid; 18,000 of these are in
remote areas.
- Though the government has "electrified" (meaning at least one house has
grid electricity) 85% of villages, only 37% of rural households have
electricity. About 50% of households in urban slums have electricity.
- Households in electrified villages do not tap into the electricity
because it is too unreliable or simply too expensive.
- There are constant energy shortages and blackouts, due to a lack of
power plants, electricity being illegally stolen from the grid, and an
18% loss during transmission and distribution caused by old technology
(compared to 6% in US).
Costs of Lighting
- The typical family spends 19 rupees on kerosene each month.(all figures below: World Bank, 2002)
- Poor households spend 4% of their income on lighting, while rich
households spend less than .5%.
- Kerosene costs 2.5-5 Rs/ klm hour.
- Incandescent bulbs cost 0.10/ klm hour.
- Electricity is 20 times less expensive for lighting than kerosene (if
kerosene is used only for lighting).
- Electricity costs 15.2 Rs/ month.
- Indian government needs about $100 billion US dollars to meet power
requirements for the next 15 years.
Energy Sources
- 70-80 million rural households still depend on kerosene for their home
lighting. Though kerosene is noxious and gives off a lot of smoke, it is
a great improvement over fuelwood fires that are traditionally used.
- Biomass is the use of cow dung for fuel. Cow dung smoke is toxic, but
is often used because it is free. Educated people tend to use
petroleum-based fuel for all their cooking rather than biomass.
Non-smoking women in India exposed to everyday biomass smoke had equally
high death rates from chronic respiratory diseases as male heavy
smokers.
- The government also uses vegetable waste (like coconut shells and sugar
cane stalks) as fuel for thermal-energy power plants. Efforts are being
made to create new species of plants that grow quickly and burn cleanly
to be used as fuelwood. To promote its use, the government provides a
subsidy and provides a low interest rate loan from the Indian Renewable
Energy Development Agency Limited (IREDA). The government currently uses
education programs to promote these new technologies of rural people.
- With 300 sunny days and 5000 trillion KwH of solar radiation per year,
solar power is a very viable option in India. India is the world's third
largest producer of Photovoltaic modules (solar panels), and 75 companies
are involved in the production of solar cells, modules and systems. Over
600,000 solar PV systems (about 40 MW) have been installed in India,
making it the largest such deployment in the developing world. In many
parts of the country there are rural energy co- operatives. Sagar Island
in West Bengal will be electrified entirely on solar energy by 2012.
- India ranks fourth in the world for wind power capacity (1,025 MW), and
there is an estimated potential of about 20,000 MW of wind power.
Furthermore, India has its own turbine industry. To promote wind energy,
the government is willing to provide soft loans to both manufacturers and
installers of wind farms.
Sources:
- "Energy." India Information, Embassy of India 2000.
<http://www.indiaembassy.org/indiainfo/india_2000/chapters/chp22.pdf>
17 Feb. 2003
- "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
- Malhorta, Preeti and Shandari, Preety. "Rural Energy Development in
India." TERI 2002
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:
- Announced earlier this year by Prime Minister Vaipayee
- By 2012, the government plans to connect all rural villages to power
using renewable energy technologies.
- To help accomplish this task, a Ministry of Non-traditional Energy has
been created to coordinate renewable energy research.
The Renewable Energy Policy Act (currently before the Indian
Parliament):
- Goals include having a renewable energy capacity of 10,000 MW by 2012
and providing electricity to 25% of non-electrified rural villages by
2012. If these goals are achieved, a 11.6% power deficit will remain. It
is believed that demand will increase two to three fold over the next
twenty years.
- The government will provide incentives for research, development, and
demonstration of new technologies, market development, and laws
prescribing a minimum of renewable energy in each state.
Sources:
- Prime Minister's Office. http://pmindia.nic.in/home.htm. 7 February
2003.
Grain Harvest in Rajasthan
Source:
http://biology.queensu.ca/~arnoldh/raj%20tilonia%20fields.jpg
Source:
http://biology.queensu.ca/~arnoldh/raj%20woman%20in%20field.jpg
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
- There is ample sunlight in Rajasthan, so PV cells would be
useful.
- Education is valued, so a light for reading may be desired.
- People in Rajasthan enjoy watching TV, and thus would like to have
electricity for that purpose as well.
Environment in Rajasthan
Living Conditions
- Months from October to February are very cold, while it is very hot
between March and September. The state gets very scant rainfall in the
desert region. During summer, people fetch water from miles away.
- The western deserts accumulate about 100 mm (about 4 in) annually,
while the southeastern part of the state receives 650 mm (26 in)
annually, most of which falls from July through September during the
monsoon season. (IndiaStat, 2003)
- Pre-monsoon season, which extends from April to June, is the hottest
season, with temperatures ranging from 32 degree Celsius to 45 degree
Celsius.
- Rajasthan has suffered a drought for the last three years.
- The poor receive a ration quota (2 kg. rice, plus pulses, sugar, salt,
and oil) from a Public Distribution System (PDS) shop and purchase other
household essentials at local market.
Infrastructure
- Most roads in Rajasthan, are tarred; nevertheless potholes are
common.
- There are less than 3000 km of national highway (Mar. 96-97).
- Most people travel by foot.
- Wealthier people travel by auto-rickshaw and jeep.
- Camels are often used in the western Rajasthani desert.
Electricity
- There is a lack of adequate power supply. The most power that is ever
available is 2-3 hours/ day, usually at night. Furthermore, the timings
of supply are unknown; there is no uniformity in the supply of power. Due
to erratic voltage, sometimes even a single bulb does not glow.
- People must wait a long time for new connection, sometimes as much as
10 to 15 years. This leads people to resort to theft.
- 90 percent of the villages in Rajasthan are connected to the power
grid, but over 60 percent of the households do not have electricity.
- Rajasthan is the first state to begin achieving the targets of solar
rural electrification.
- The Union Ministry of Non-Conventional Energy Sources has allotted
5,000 solar home lighting systems for rural areas in the state for the
current financial year. This is the highest target among all states.
- A minimum of ten connections are allotted to a village or cluster of
huts under the Solar Rural Electrification Program. One solar panel is
installed on the roof of each beneficiary's house which is connected to
battery. Two fixtures and switches are installed in every house.
- The system supplies electricity regularly for three to four hours
daily. Even in the absence of sunlight, the system can supply electricity
for up to three to four days.
- Rajasthan has a 294.9 kWh per capita per year electricity consumption.
This is less than national average. (IndiaStat, 2003)
- Rajasthan spends the lowest amount on energy compared to other Indian
states -- 13 Rs./month on kerosene, 16.9 Rs /month on electricity.
- 200 klm hours are used per capita each year (equivalent to one 60W
incandescent used one hour every-other day). (Indiastat, 2003)
Economic and Political Conditions in Rajasthan
Politics
- Administratively, Rajasthan is further subdivided into 32 districts,
which are further sub-divided into tehsils and development blocks.
- A panchayat is in charge of community governance and development.
Panchayats elections are regularly held and overseen by state election
commission.
- Rajasthanis in 1997 received the right to all panchayat-related
documents, and in 2000 received the right to information in all spheres
of governance with the help of the NGO MKSS (Madzoor Kisan Shakti
Sangathan).
- Nearly all villagers vote, yet women, people from tribal areas, and the
landless have lower participation rates.
- 20-40% of villagers participate in PRI decision-making.
- One commonly held belief is that you can only get benefits in a village
if you are associated with the sarpanch's (leader's) family. Corruption
among sarpanchs is rampant, and panchayat officials will not stop the
corruption.
- Since 1994, 33% of panchayatas were women. Yet, if women are elected
the sarpanchs, their husbands often have power instead.
Economics
- Livestock breeding is the traditional subsistence strategy in western
Rajasthan and, in principle, well attuned to its natural resource base.
It is an important source of income for the poorer segments of the rural
population with limited or no land resources.
- Minimum wage is Rs. 60/day.
- 79% of the population is rural.
- 37% of the rural population lives in poverty.
- Mean annual household income: 34,551 rupees. ($735)
Social Structure in Rajasthan
Education
- Illiteracy is high for men and even higher for women.
- Children often leave school to aid their mother with household chores
or to help out in the fields.
Religion
- Many people in Rajasthan are Hindu.
- The caste system is adhered to.
Use of Light
- Currently, women spend 2-6 hours and walk 4-8 km daily gathering
firewood to light their homes and to use for cooking. Many women have
chronic back problems from carrying a 10kg (~20 lb) load on their heads
every day.
- Candles and kerosene lamps are used at local temples,
- The idea of putting light in the shops in the market may appeal to
villagers because they have to walk far to reach them at night. They
might also appreciate a torch for walking at night.
Receptiveness to Technology
Aspirations
- People always want to own more land.
- Most parents would like to be able send both of their children to
school and would like for their children to have adequate time to
study.
- People want an irrigation system.
- Parents hope that their daughters marry someone of the same caste or of
a higher caste.
Sources:
- Center for Consumer Action Research and Training.
http://cuts.org/cart-power-er-dev-abu.htm. 7 March 2003
- Embassy of India, Washington D.C.
http://www.indianembassy.org/indiaingo/india_2000/chapters/chp17.pdf. 7
March 2003
- The Hindu.
http://hinduonnet.com/thehindu/2001/03/04/stories/1404221e.htm. 7 March
2003
- IndiaStat.com. www.indiastat.com. 7 March 2003
- IndiaTogeter.Org.
http://www.indiatogether.org/govt/ocal/articles/arc-rahasthan.htm. 7
March 2003
- Pegu, Rink. The Week. "Packing a Punch."
http://www.the-week.com/99nov21/events2.htm. 7 March 2003
- Rajasthan Travel Tours.
http://www.rajasthan-travel-tours.com/rajasthan-climate/. 7 March
2003
- United Nations Development Programmme. "Chasing a Right."
http://www.undp.org/governance/docsaccess/chasing_a_right.pdf. 7 March
2003
- Vetwork UK. http://www.vetwork.org.uk/ilsel.htm. 7 March 2003
- The World Bank Group. "Poverty Net."
http://poverty.worldbank.org/library/view/10203. 7 March 2003
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:
- Most farmers get their income in large spurts depending on the harvest
cycle. Therefore, they will only have spending money at certain times of
the year.
Environment in West Bengal
Location
West Bengal borders Bangladesh, Bhutan, and Nepal.
Population
- West Bengal is home to 68 million people.
- Three-fourths of these people live in rural areas.
- The population density is 766 people per square km.
- West Bengal's most populous cities are Calcutta, Howrah, and
Haldia.
- The Midnapore district has the highest population, while Calcutta has
the highest population density.
- Houses tend to be further apart from each other in villages than is
typical in India.
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
- People in rural West Bengal villages tend to live in mud thatched homes
with dirt floors.
- About a third of households have electricity. Where electricity is
unavailable, people use kerosene, which costs 37 Rupees/ month
(0.77USD).
- Three-fourths of households have a safe drinking water supply.
- While one-third of them have flush toilets, half of West Bengal
households have no toilet facilities at all.
- Many rural villages are remote. Public transportation is available in
West Bengal, but it will only take one so far. Eventually, to reach most
small villages, one will have to do some lengthy walking.
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
- One study showed that the ideal family size in West Bengal is 2
children; however, the average family size is currently 4. This average
is expected to decrease over the next few decades. (International Institute for Population Studies, 2001)
- Many women work solely in the home tending to children and cooking.
However, women do sometimes work outside of the home if it is financially
necessary. 29% of West Bengal women work in addition to doing domestic
chores, and 89% of these women work for cash. (International Institute for Population Studies, 2001)
Health
- The government successfully dispense general health information by
radio. For example, it was public announcements on family planning that
has led to a decrease in family size.
- Many people are malnourished. 67% of women are anemic, and 48% of
children are underweight. (International Institute for Population Studies, 2001)
- The infant mortality rate (under the age of 5) is 67.6%. (International Institute for Population Studies, 2001)
Education
- The literacy rate for females is 57%; meanwhile, 67% of males are
literate. (International Institute for Population Studies, 2001)
- Schools are not available in all West Bengal villages.
- Education is valued, but children must often leave school to help their
families earn money.
Religion
- The majority of West Bengal residents are Hindu.
- While the caste system is in effect in some areas, a tribal system
divides people in other areas.
- There is a significant Muslim population, approximately 23% of state population.
Use of Light
- Children, if they are in school, need light to do their homework.
- Light can also be used to make crafts at night and therefore increase
family income.
- People are generally open to outside technology.
Sources:
- Dasgupta, Sourav and Sudeshna Dasgupta. "Bengal Web."
http://www.bengalweb.com/intro/wbengeo3.html. 9 March 2003
- IndiaChild. "Indian Villages."
http://www.indianchild.com/indian_villages.htm. 9 March 2003
- Israel, Samuel ed. Crafts of West Bengal. Grantha Coporation:
Middletown, New Jersey, 1994.
- National Family Health Survey, 1998-1999. International
Institute for Population Sciences: Mumbai, 2001
- World Bank, 2001
http://www.rnw.nl/humanrights/html/09_march_1999.html
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:
- A joint venture in which they have a partner in India.
These are the most common--an Indian specialist would be aware of
local details that a foreigner may not know.
- A completely foreign-owned company.
These are more difficult to maintain. It is also more likely that the
investor will be troubled by government bureaucracy.
It is in our best interest to do a joint venture.
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:
- Dealing with suppliers (LED manufacturers, raw materials providers,
electrical component manufacturers) to leverage buying in bulk
- International financials: fundraising, assisting subsidiaries,
diverting resources from a successful venture to other projects in other
countries as necessary.
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.
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:
- Manufacturing in India would allow us to integrate strong Indian
R&D development in energy storage, lighting, and alternate energy
sources into our project.
- India's natural resources could be utilized.
- There are potential government subsidies for manufacturing renewable
energy products.
- Cheap labor (though potentially not as cheap as some other areas)
exists in India. A large portion of the labor force is also
technically-trained and speaks English.
- Allows specialization of product development for Indian market.
- Distribution would be faster and cheaper.
Drawbacks of manufacturing in India:
- There are possibly cheaper manufacturing centers (because of labor
costs) in other countries. In 1999, Foreign Direct Investment made up .5%
of India's GDP compared to 4.1% in China. (all figures below: World Bank, 2002)
- India has low labor productivity compared to other Asian developing
countries, even when India's cheaper labor costs are taken into mind
- Businesses are subject to frequent visits by state officials. 15.9% of
management time is taken to deal with government officials on regulatory
administrative issues. This is compared to 11.4% in China, 4.3% in Latin
America, and 5.8% in OECD countries.
- There are long delays at customs houses: India averages 10.3 days
compared to 7 days in Thailand
- There is a poor supply of power. 45% of surveyed Indian firms had their
own generators, a figure which is very high by international
standards
- With an average interest cost of sales (per rupee) of 5.5%, Indian
manufacturing uncompetitive
- India has a weaker communications infrastructure compared to other
countries.
- Internet hosts per 10,000 people: .2 India, .6 China, 40.9
Mexico.
- Telephone mainlines per 1,000 people: 22 India, 70 China, 104
Mexico
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:
- We can sell our product directly to the government and allow them to
distribute via their established network. This allows us to focus on
other concerns besides distribution. However, there are a few
disadvantages to this method. If there is a shortage of units, available
units will first go to friends of distributors. Also, this method may
take a while implement due to government bureaucracy.
- We can establish a partnership in which our partner distributes our
product for us. This allows us to have a greater degree of control in
where our product is distributed through their network than we would have
if we worked with the government. However, extra expenses may be required
to acquire the partnership.
- We can have a centralized sales force of traveling salesmen that travel
around the country selling our product. This gives us maximum control in
distribution because we direct salesmen where to go. However, it may be
cumbersome and costly to find and train a sales force.
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:
- Asian Development Bank
- Grameen Foundation
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.
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
- Radio
- Word of Mouth
- Television
- Newspapers and Written Media
- Written Signs
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.
- Installation and Training.
- Maintenance/repair. This is a crucial service. Many other social
ventures in rural India have failed because they did not provide
maintenance and repair of their project.
- Warranty. This might be what encourages our users to invest in our
light.
Any successful business plan must create lasting, meaningful partnerships
to maximize the resources of existing organization.
- Indian Government (State or National)
- Various Electric Companies
- Kerosene/Petroleum Companies
- Indian Cricket Team/Bollywood Stars
- Petroleum Conservation Research Association
Specific Potential Partners
- Indian Renewable Energy Development Agency (IREDA)
- Tata Energy Research Institute (TERI)
- The Grameen Bank: offers microfinancing
- Barefoot College (Rajasthan, India): trains local women in how to maintain and service
solar energy panels
Sources:
- Indian Department for Industrial Promotion. http://dipp.nic.in/. 8
March 2003
- Personal Interviews. Achal Garg
- Personal Interviews. Akhil Gupta
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 9 March 2003
- 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
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.
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.
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
- There are skilled craftspeople in every village.
- Their products will sell, and enough people will buy them to make a
profit.
- LUTW will be able to staff someone who can manage these retail aspects
of the business or find an appropriate partner.
Strengths of the Lights for Goods Model in India
- Many different people are able to gain a secondary source of
income.
- It celebrates local culture.
- It does not necessarily involve government officials that would be
corrupt.
- It does not involve microfinance.
Weaknesses of the Lights for Goods Model in India
- It will take a long while to get every aspect of this model
started.
- We must research how to determine what is art that would sell.
- Shipping and storing the art may be problematic.
- We must find a partner that would buy the art from us and sell it.
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:
- Having a woman in this role will be culturally acceptable.
- She will be able to make enough money from her services and selling
lights to sustain this as a full-time job.
Strengths:
- Training in other electrical areas generates more wealth than from
service of one product.
- Provides significant and extended wealth generation.
- This sort of model is in place already in India.
Problem areas
- There is limited application in urban areas.
- This may require involvement of local government.
- This may only work in regions with some capital and openness to large-scale
electrification and lighting systems
- Each village will have to be approached individually, and will require
significant time to train her.
General Numbers
Income
- Average person in India makes approximately $500 a year.
- Estimated savings in kerosene per month due to one light: 20-40 rupees
($0.40-$0.80).
Lighting Unit
- LED (4 Per lamp) $1.00 / LED: $4
- Fixture for lamp: $1
- Cost of battery: $4
- Estimated battery life: 1 year
- Distribution/Manufacturing of battery: $1.00
- Battery maintenance cost: $0.50 / year
- PV System, $3/watt x 5 watts = $15
Cost to produce one unit: $25.50
Lights for Goods Model
Start-Up Investment
- 2 lights per person: $50.50
- Supplies to start: $10
- Training for sales force: $10 per person + salary
- Training for maintenance: $10 per person
Micro-Enterprise Revenue
- Average time involved to make one piece of art: 30
- Our selling price to partners for such a piece of art: $60
- Amount given to artist till investment recovered: $25
- Amount to LUTW till investment recovered: $35
- Time to recover initial investment: 2 pieces of art sold
- Amount given to artist after investment recovered: $45
- Amount to LUTW after investment recovered: $15
Maintenance Revenue
- Electrical appliances needing repair a week: 10
- Price per repair: $0.50
- Total revenue per week: $5.00
- Weeks to pay off training fees (Assuming $1.25/week payment): 8
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
- Electrical appliances needing repair a week: 10
- Price per repair: $0.50
- Total revenue per week: $5.00
- Weeks to pay off training fees (Assuming $1.25/week payment): 16
Micro-Enterprise Revenue
- Total units bought per batch of sales: 10
- Average size of a village: 1500 people
- Average size of customer base: 300 people
- Price charged per lamp: $8
- Profit per light: $0.75
- Profit per batch: $7.50
Miscellaneous Costs to LUTW from One Light Technician
- Stipend for participating in light buy back program: $15 per light
(after 5 years of use)
- Total cost per year to LUTW: 20 lights x $15 per light = $300
- Stipend for batteries-for-books program: $2 per battery
- Total cost per year to LUTW: 200 x $2 = $400
- Total = $400 per year (first 5 years)
- Total = $700 per year (after 5 years and the used lights come back to
us)
Sources:
- Indian Department for Industrial Promotion. http://dipp.nic.in/. 8
March 2003
- Personal Interviews. Achal Garg
- Personal Interviews. Akhil Gupta
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 9 March 2003
Section 2: General Country Information
- CIA. The CIA World Fact Book: India.
http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb.
2003
- Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb.
2003
- "Energy." India Information, Embassy of India 2000.
<http://www.indiaembassy.org/indiainfo/india_2000/chapters/chp22.pdf>
17 Feb. 2003
- "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
- The Fix. Welcome to
India. www.welcometoindia.com. 3 Feb. 2003
- Malhorta, Preeti and Shandari, Preety. "Rural Energy Development in
India." TERI 2002
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 7 Feb. 2003
- The World Bank. India Data Profile.
http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=IND&CCODE=IND&CNAME=India&PTYPE=CP.
7 Feb. 2003
Section 3: Local User Demographics
- Center for Consumer Action Research and Training.
http://cuts.org/cart-power-er-dev-abu.htm. 7 March 2003
- Dasgupta, Sourav and Sudeshna Dasgupta. "Bengal Web."
http://www.bengalweb.com/intro/wbengeo3.html. 9 March 2003
- Embassy of India, Washington D.C.
http://www.indianembassy.org/indiaingo/india_2000/chapters/chp17.pdf. 7
March 2003
- The Hindu.
http://hinduonnet.com/thehindu/2001/03/04/stories/1404221e.htm. 7 March
2003
- IndiaChild. "Indian Villages."
http://www.indianchild.com/indian_villages.htm. 9 March 2003
- Israel, Samuel ed. Crafts of West Bengal. Grantha Coporation:
Middletown, New Jersey, 1994.
- IndiaStat.com. www.indiastat.com. 7 March 2003
- IndiaTogeter.Org.
http://www.indiatogether.org/govt/ocal/articles/arc-rahasthan.htm. 7
March 2003
- National Family Health Survey, 1998-1999. International
Institute for Population Sciences: Mumbai, 2001
- Pegu, Rink. The Week. "Packing a Punch."
http://www.the-week.com/99nov21/events2.htm. 7 March 2003
- Rajasthan Travel Tours.
http://www.rajasthan-travel-tours.com/rajasthan-climate/. 7 March
2003
- United Nations Development Programmme. "Chasing a Right."
http://www.undp.org/governance/docsaccess/chasing_a_right.pdf. 7 March
2003
- Vetwork UK. http://www.vetwork.org.uk/ilsel.htm. 7 March 2003
- The World Bank Group. "Poverty Net."
http://poverty.worldbank.org/library/view/10203. 7 March 2003
Section 4: Business Context
- Indian Department for Industrial Promotion. http://dipp.nic.in/. 8
March 2003
- Personal Interviews. Achal Garg
- Personal Interviews. Akhil Gupta
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 9 March 2003
Section 5: Business Model
- Indian Department for Industrial Promotion. http://dipp.nic.in/. 8
March 2003
- Personal Interviews. Achal Garg
- Personal Interviews. Akhil Gupta
- Press and Information, Embassy of India. Embassy of India, Washington
D.C. www.indianembassy.org. 9 March 2003
