ITC ECHOPAL

PROJECT

MOTIVATION, PRINCIPLES AND BARRIERS

Page | 1

Table of Contents
ITCS MOTIVATION FOR CREATING THE E-CHOUPAL MODEL........................................3
PRINCIPLES EMPLOYED TO BUILD THE NEWLY FASHIONED SUPPLY CHAIN..................5
BARRIERRS FACED BY ITC IN EMBARKING ON THIS PROJECT......................................5
DEVELOPING THE E-CHOUPAL PLATFORM FOR THE FUTURE.......................................7

ITCS MOTIVATION FOR CREATING THE ECHOUPAL MODEL

Page | 2

The e-choupal model of rural growth was kick started by ITCs International Business Division
(IBD) in the year 1999. As part of this revolutionary initiative, it took the concept of choupal one
step further, which traditionally meant meeting of farmers in an open space to discuss ideas and
knowledge, and, instead, installed computer with internet connectivity through satellite
technology and solar power in such meeting points in every village in Madhya Pradesh, a central
state in India, and connected every village in this way which famously came to be known as echoupal centers. Additionally e-choupal supports best farming practices and methods among the
farmers by training each farmer to use the internet facilities in their search for finding the best
price available for their produce apart from mandis, they were also taught to use a site dedicated
especially for the farmers (www.soyachoupal.com), also to look for information on weather
condition and supplies of agricultural inputs like seeds and fertilizers. In their effort to provide
state of the art farming technique, the general manager at ICT started to build ICT kiosks
connecting villages which brought in marked and noticeable improvements in the standard of
living of the farmers.
The main motivation of e-choupal centers was the IBDs idea of recreating and operationalizing
its vision of creating a sourcing network with direct links to the farmers in the rural areas, which
would inherently assure supply for the company and also bring down the costs through
improving the efficiency of procurement value chains and also to use the same platform to
provide informational services and other beneficial services to farmers, implying that the farmers
also benefitted, getting paid better price for their products with the elimination of middlemen and
also bringing down their operational and other costs with the use of e-choupal.
This e-choupal programme is intentionally targeted and directed in the rural, agricultural areas by
ITC in the belief that this would improve the quality of life in rural India with encouraging a
Page | 3

business model which is market led leading to incentives of improving production by the farmers
with enlarged capacity of risk management, larger investment and higher output quality. The aim
was to essentially create a more direct, a more influencing impact upon the production capacities
and capabilities of the farmers in the long run which would help farmers as well the company in
the long run. Simultaneously, using this value chain to channel and direct other essential interests
of the farmers in the form of retail products, banking and information services. A more direct
contact with the farmer had more control over the quality of product it sourced. The channel was
also perceived to be use as a route for directing services in the form of FMCG, banking,
insurance for farmers and creating a sort of an information pool among the farmers which would
ultimately be able to integrate rural areas into large corporate markets, which would go a long
way in improving the earnings, and as well as the quantity and quality of consumption in the
rural areas. (Roshni Neggehalli, Deepa Shankaran, 2008)

PRINCIPLES EMPLOYED TO BUILD THE NEWLY

FASHIONED SUPPLY CHAIN IN THE RURAL
AREAS
The e-choupal model of business development depends strongly on trust and confidence on the
part of farmers as a group and also individually. It was not enforced and laid down by any of the
ITCs people to the farmers that they have to sell their produce or are obliged to sell a certain or
any proportion of their produce. A more fundamental, essential driver of the dynamics of the

Page | 4

entire system was an interaction process between the farmers themselves and between the
officials on the ground with the farmers. The web site was created to be a tool to assist the
farmers and used by the farmers in their efforts to understand and decide and deliberate the best
mechanism to pursue, which for them whom to sell the produce to. ITC never bound any farmer
to any sort of contract and essentially, made sure that with the information tools at their disposal
they would decide the best action themselves in a longer run and this would bring about a change
which the International Business Division of ITC had dreamed of when they launched this
network.
ITC was also successful in convincing the governments of the potential benefits to the farmers
and the economy and the governments on its part in brought in changes in the regulations to
allow the farmers to sell the beans outside of mandis. The transparency of the e-choupal - the fact
that website was available to anyone, including the government to cross check the ITCs at any
point of time was a big factor in the government acceptance of the initiative.
The realization among the officials was that once a proper use of the tools are developed by
farmers, farmers will ultimately arrive at an amicable and desirable solution, which was selling it
to the ITC procurement centre located within a radius of 20-30 km with the help of sanchalak
who would help them find the best price available at different sources. The Sanchalak was very
important figure in the entire process. He was appointed to serve as a link between e-choupal
centers and the other surrounding villages in the vicinity of the main village in which the echoupal centre was based. The Sanchalak was subjected to take an oath that he would uphold the
high standards and will not indulge in wrongful activities and would maintain the ethics, moral
responsibility, image that ITC has created through the website. The Sanchalak was a highly
prominent figure after the ITC implemented such ethical and moral for the same and therefore
Page | 5

the result was that unscrupulous Sanchalak were deterred from this position. ITC kept a close
watch of the actions of Sanchalak and any mischief on his part meant removal and punitive
action against him.
ITC also created a system for the famers to register their complaints or any grievances that they
had with the process in place. Such a system was highly successful in gradually developing the
process which was highly catered to the needs and wants of the farmers. (Roshni Neggehalli,
Deepa Shankaran, 2008)

BARRIERRS FACED BY ITC IN EMBARKING ON

THIS PROJECT
There were a number of significant barriers faced by the ITC in undertaking this high level of
empowerment for the farmers and has come a long way to cover almost 7500 villages and
serving almost 1 million villagers. The biggest challenge and barrier was to make people familiar

Page | 6

with the concept of internet and World Wide Web, which then itself was in the nascent stages of
development. When the whole concept of using computer and internet was first proposed to the
farmers, it was met with initial hesitation by some farmers, understandably because never had
any industry leader undertaken such a grass root activity for the farmers. There were suspicions
by some farmers as to the intent of ITC but with time the farmers appreciated the investment
company made in the form of installing technology and ultimately understood the benefits that
technology presented their lives with as they could get live quotes at various markets for their
produce. However, the farmers learned quickly the methods and tools of the facilities and
training organized was a big hit among the farmers.
One of the essential barriers for ITC was that the regulatory practices in place then by the
Agriculture Produce Marketing Committee Act that prohibited the purchase of specified
commodities from other sources than the government designated mandis. However, ITC
aggressively pursued the idea of setting up the e-choupal by convincing the political
establishment and bureaucrats of the fact the farmers will be better placed as a group and it will
lead to greater and equitable prosperity among the farmers. They could pursue the state
governments with this idea. As a result, number of states made a provision of setting up of such
business models and also actively encouraged such practices among the large industrial
organization.
There were a number of other challenges in the form lack of a proper system of infrastructure in
place for establishing network of e-choupal among the villages. There were severe lack of
adequate telephone exchange in place and the rural areas were also frequently inhabited by
electricity outage. ITC had to overcome all these challenges and it did so by setting up solar

Page | 7

batteries at various locations to recharge the batteries. It also managed to upgrade the telephone
lines and also set up various VSAT links (Dewan).

DEVELOPING THE E-CHOUPAL PLATFORM FOR

THE FUTURE
The e-choupal platform has become an essential knowledge sharing platform among the farmer
and has brought in significant changes in the faring mechanism and has modernized many of the
age old farming technique. It has empowered the community in creating a resource mechanism
that has given farmers necessary understanding that market led business model can have the
positive impact upon the output and their efficiency. The resources and choice of the farmers

Page | 8

have been widened and they have been exposed to banking and other facilities through the echoupal network.
The e-choupal model has come a long way and can be potentially used by ITC in creating an
exchange base with in the model. It could serve as a base of matching different value chain
players in the rural developing markets. The FMCG could link retailers to sourcing of goods and
the sanchalak for distribution of goods.
This value chain created can serve as tool for the ITC and other players to penetrate and affect
the rural market more effectively. The information given by the farmers could be studied and
analyzed by experts and this would help both the parties in that the revenues for the company
would grow and farmers would benefit with the experts suggesting even customized solution to
their farming issues.
Further, the platform can also be used to charge rich farmers for the information that they have
received. The user would pay for the information by experts and would make ITC more
responsible, accountable and professional since the information is being bought. Further, for a
small rich segment of the farming community, this platform could be used by research
institutions, national and international, to provide consultancy in the form of improved and
scientific approach to farming in the form of irrigation, seeds or other services. For the company
ITC, this platform could be used to collect data and other important inputs in regard to
agriculture that can be used by the company in creating an Agriculture Data Base for the
Indian economy. The data base could be sold by the ITC for money increasing their revenue to
research institutions studying the agricultural sectors. It could serve both the company and the
farmers.

Page | 9

Further, the e-choupal centre could also be utilized for the benefits childrens education in the
rural areas when not in use for a certain time of the day. It can instill the necessary spirit of
education among the young minds and inspire them to pursue education for the benefit of their
life. It can be used a channel to increase the level of depressed rate of literacy in the rural areas.
Further, such a channel can also serve as a important source for the employment of those people
who have high understanding of the computer and internet usage. It can increase knowledge and
also greatly increase their appreciativeness of the computer.
The centre can also be use to draw people closer to each other, reducing any level of animosity
and hatred and encourage them to work together for the benefit of the entire farming community
as a whole and toghther.

REFERENCES
Dewan, S. B. E-CHOUPAL: ITC's RURAL NETWORKING PROJECT. AHMEDABAD: Indian
Institute of Managemet, Ahmedabad.
Roshni Neggehalli, Deepa Shankaran. (2008). IT FOR CHANGE CASE STUDY - echoupal AN INITIATIVE OF INITI. Bangalore: National Printing press, Bengaluru.

Page | 10