100,000 IT-enabled Common Services Centres in Rural India

Opportunities for the Retail Business

Background

The Common Services Centres (CSC) Scheme

Part of the ambitious National e-Governance Plan (NeGP) with a total budget outlay of Rs. 22,600 Cr

The Scheme envisages the setting up of 100,000 IT-enabled access points for Government & Private sector services at the doorstep of the rural citizen

Cabinet Approval to the CSC Scheme undertaken in September 2006 for a total outlay of Rs.5742 Cr

IL&FS appointed as the Program Management Agency (3 years) to support the Department of IT, Government of India to facilitate the Scheme rollout

Introduction

About the Scheme

100,000 CSCs in Rural India - 10,000 in Urban India

One CSC to service a cluster of 6 villages 6,00,000 villages networked

CSCs enabled with appropriate IT Infrastructure and Connectivity

Scheme to be implemented in a PPP Framework

Focus on Rural Entrepreneurship & Market Mechanisms

CSCs to be positioned as the retail extension outlets in rural India

No Capital Subsidy but Guaranteed Revenue Support

The CSC Structure

DIT NLSA State Government

G2C Services

B2C Services

Service Provider

Service Centre Agency (SCA)

Village Level Entrepreneur (CSC Operator)

Rural Households

The SCA

Owner of the CSC business

Selected by State Governments through a competitive bidding process

Selection based on level of revenue support bid

Invests, operates and manages the CSCs in designated locations

Obligated to provide G2C services - other services optional

Allowed to co-brand the CSCs along with the State

Guaranteed Revenue Support payable for 4 years @ per CSC/per month

Role of IL&FS

Facilitate State Governments to rollout the CSCs in their locations

Support the SCA in:

Pre-selection Phase

Developing State-wise business plans

Support in the RFP Bidding process

Post-selection Phase

State facilitation for G2C services

Enabling B2C partnerships

Recommending appropriate technology and connectivity options

Capacity building solutions

Resource Mobilization support

Strategic inputs and support during the CSC rollout

Recommended CSC Infrastructure

100 150 sq. ft space 2 PCs with UPS 2 Printers (Inkjet + Dot matrix) Digital/Web Camera Wireless Connectivity Genset/Inverter, Mobile Phone, Furniture and Fixtures OS and other software Total Estimated Cost per CSC:1.25-1.50 lacs (excl. land and building)

The Services G2C

Government Services G2C Land Records Birth/Death Certificates Grievances Form downloads and submissions Bill payments water, electricity, telecom, etc. Licenses, permits, subsidies Property Tax and Registration Bus pass, Railway tickets, Passport, etc.

Business to Business B2B/G2B Market Research Rural BPO Services (Data Collection, Data Digitalization, etc.) Advertising, Branding and Promotions

The Services B2C and B2B

Business to Consumer Services - B2C IT services (Printing, Scanning, DTP, web surfing, etc.) Agri-business services (consulting, testing, procurement, etc.) Banking and Financial Services (Loans, Deposits, SHGs, etc.) Telecom Services (PCO, new connections, mobile phone sales) Commercial Services (Matrimonial, Astrology, Bio-data, etc.) Retail Sales & Referrals (FMCG, Consumer Goods, Vehicles, etc.) Education Services (IT Training, English Speaking, etc.) Health (Tele-medicine, OTC medicines, etc.) eCommerce (Online shopping, Trading, etc.)

Current Status

Current Status of the CSC Rollout (As on June 8, 2007)

The Peek into the CSC Pilot: Baramati, Maharashtra

Retail Activities at the CSCs

Retail Activities at the CSCs

Retail Activities at the CSCs

PR, Branding, Market Research and Promotions

Income Potential for B2C Services

Mobile Phone Sales: 6-8% commissions Rs. 150-600 per sale

5 phones sold through 2 CSCs in last 2-1/2 months

Agri-procurement Rs.500 per ton as commissions for Pomegranate Procurement

Procurement undertaken for 50 tons, but deal could not be finalized due to payment issues. Next deal in pipeline for Grapes.

Banking

Rs.100-500 commission on value of loans referred Rs. 22 lacs worth of loans disbursed in last 4 months through 1 CSC

Income Potential for B2C Services

Equipment Hire/sale Bosch Power tools sold through Myiladuthurai CSCs and given on hire in Baramati CSCs

Rs.1.20 lacs worth of equipments sold by 5 kiosks in Myiladuthurai Total commissions: Rs.24,000 to kiosk operators

Canara Bank loans provided to the buyers In Baramati, Bosch Power Tools are given on hire for 5-7 days a month Power Tools Training program for village youth in pipeline

IT Training

2 kiosks have enrolled over 48 students in the last 2 months Students are paying Rs.150 for a 45 days Basic IT Course

Income Potential for B2C Services

Rural BPO Myiladuthurai kiosks are successfully implementing the rural BPO model for ITCs Agarbatti division

Earnings for the Community

Stake Holders

Earnings per day

Earnings per month (INR)

Status Field:

Women Rollers 1300 1560

4kgs a day X Rs.12.50

1. 2. 3. 4. 5.

A total of 180 women rollers active Average income- Rs.850 per roller per month Kiosk average revenue Rs. 400 Highest revenue earned by a kiosk Rs. 1400 Highest revenue earned by Roller Rs. 1600

CSC Operator

4kgs a day X 15 Women per kiosk X Rs.1.00 10400

SCA

4kgs a day X 200 women X Rs. 0.50

Bank Loans in Katewadi, Baramati

Opportunities for Retail Businesses

CSCs as Retail Extension Outlets

Extending the Business Supply Chain

Such an access point can drive tremendous synergies for large retail

businesses in the following areas:

Identifying customers

Disseminating brand related knowledge through PR activities

Training and capacity building activities

e-Commerce

Supply Chain facilitation

Online tracking and monitoring

Brand Building and Advertising

Target-driven retail sales and distribution

Options for Retail Businesses

Service Provider to CSC

Use the CSCs as a part of their Business Supply Chain

Service Center Agency

Own the Channel and use the same for integrating various businesses that target rural markets

Option 1: As Service Provider

Partner with existing SCAs in locations of interest

Integrate CSCs in existing supply chain model

Develop an agri-business and implementation plan for the CSCs in association with the SCAs

Set targets for achievement and delivery

Undertake extension and procurement activities

Develop appropriate monitoring and tracking mechanisms

Pros and Cons

Low investment model

No dealings with State

Option to pick and choose locations

Limited hold on the SCA as well as CSC

Exclusivity may not be guaranteed

Option 2: As SCA

Make a State wise business plan

Bid through a competitive State selection process

Identify CSC locations

Total Investment of Rs.3.5-5.0 crs per district

Select and train kiosk operators

Set up the connectivity infrastructure

Set up technology architecture like sever, back-end call center, etc.

Set up centers with IT infrastructure

Set up Service Partnerships

Set up a centralized Portal and monitoring mechanisms

Undertake kiosk branding and launch

Pros and Cons

Guaranteed exclusivity for all business activities

Can be used for Procurement as well as Retail distribution

Access to State connectivity at subsidized rates

Guaranteed footfalls to the CSC due to G2C services

High Investments

State co-ordination essential

Focus on G2C services mandatory