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Briefing Book Table of Contents

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 Economy2.4 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 Mundrafrom Rajasthan, 42 years old

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

4. Business Context

4.1 Overarching Business Climate4.2 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?
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India, with a large population of people who do not have access to efficient lighting, ishome to many of our potential users. Eighteen thousand rural villages in India lackelectricity. This automatically puts much of rural India at a disadvantage in comparisonto richer parts of urban India. Lighting is useful for many things, from children beingable to study at night to parents being able to make a few more crafts that they cansell for more money. Recognizing this fact, the Indian government is in the process ofbringing electricity to these villages. However, it will take many years before themajority of these communities, some being located in very remote areas, can reliablybe 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 theirnumerous benefits over other types of lights, can possibly be what the Indiangovernment is looking for. India's political and economic stability, relatively stronginfrastructure, and various established manufacturing centers also present a beneficialenvironment for a new business venture.

1.2 Initial Target States

Because the vast majority of southern India is already electrified, we initially looked tonorthern India for potential users. Unfortunately, many areas of northern India arecurrently experiencing violent social confrontations that would greatly weaken ourability to establish a basis for a successful business. Also, many areas of northernIndia are plagued by a poverty so deep that lighting is a trivial concern. As a result, thestates of Rajasthan and West Bengal (in west and east India respectively) werechosen because of their relative social and economic stability. Though numerouspeople in both of these states live on less than 2 USD per day, they still have somedisposable 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 ofenvironments in which to test the product.


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Source: www.welcometoindia.com

Notable aspects of India's climate

Monsoons affect east and southwest India from June to October. Flooding iscommon during these months. In these areas, photovoltaics would not be thebest source of energy; other options such as mechanical sources of energyshould be considered.There is a great amount of humidity in India, particularly along the coast, and73% 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, itshould be set up in such a manner that it will not hurt people during anearthquake.In the arid areas of northwest India, the product should be able to with standtemperatures over 100 degrees Fahrenheit.

Sources:

1. CIA. The CIA World Fact Book: India.

http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb. 20032. The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 20033. Press and Information, Embassy of India. Embassy of India, Washington D.C.

www.indianembassy.org. 7 Feb. 2003


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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.

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

Sources:

1. The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 20032. Press and Information, Embassy of India. Embassy of India, Washington D.C.


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 andpassengers; due to heavy demand by industries, the government is working toimprove the existing network.Air India Limited is the major International carrier of the country (flies to US andalmost everywhere else). Indian Airlines is the major domestic air carrier of thecountry. It operates 57 domestic stations and 17 international stations in Asia.

Sources:

1. Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb. 2003
http://www.censusindia.net/results/2001maps/gallery/map2.html


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2. The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 20033. Press and Information, Embassy of India. Embassy of India, Washington D.C.


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 theIndian economy. Growth in the manufacturing sector slowed in 2001.

General Statistics:

Debt Classification: less-indebted (World Bank, 2001)Exchange rate: 48.336 rupees / US dollarGDP 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 thegovernment's biggest priority.

Classified as a "low income" country by the World Bank with a GNI (grossnational income) of $450.Great inequality in the distribution of wealth: the richest tenth of households hold33% of wealth, while the poorest tenth only hold 3%

29% of the population lives below the poverty line; 70% of these people reside inrural areas86% of the population lives under $2 per day; 44% lives under $1 per day25% of the population does not have enough money to eat adequatelyBecause of the high levels of poverty in the countryside, huge numbers ofmigrants are flocking to the cities in search of a job and a better life. The citiescannot support this swelling much longer, meaning that rural living must beimproved to retain people.

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. 20033. Press and Information, Embassy of India. Embassy of India, Washington D.C.

www.indianembassy.org. 7 Feb. 20034. 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

The Indian government is a representative democracy, with a separation ofexecutive, legislative, and judicial powers. Elected in 1998, the prime minister isAtal Bihari Vajpayee. The government is stable: there have been no major coups


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since 1947.Challenges we will face when implementing any business plan include cronyism,and corruption within the regulatory bodies and judicial system. In 2002, theinternational monitoring organization, Transparency International, rated thecorruption of the Indian government as 2.7 on a scale of 10, with 10 being theleast corrupt. Furthermore, government bureaucracy is extensive, and anybusiness faces numerous inspections from tax agencies and safety regulators. Itis important to note that the government shows preference to businesses with along history in India and to Indian-owed companies.

The government is a major employer in many areas of India due to little privateinvestment. It consumed 10% of India's GDP in 1996. It provides the majority ofinvestments in the science and technology sectors, particularly in the areas ofdefense, nuclear science, space, and agriculture.

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 toIndian 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 beenrapidly accepted by rural people.

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

Access to Electricity

Electrical consumption per capita is 363 kWh (growing), compared to 11,822kWh in the US. (all figures below: TERI, 2002)80,000 villages are not connected to the grid; 18,000 of these are in remoteareas.

Though the government has "electrified" (meaning at least one house has gridelectricity) 85% of villages, only 37% of rural households have electricity. About50% of households in urban slums have electricity.Households in electrified villages do not tap into the electricity because it is toounreliable or simply too expensive.There are constant energy shortages and blackouts, due to a lack of powerplants, electricity being illegally stolen from the grid, and an 18% loss duringtransmission 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 householdsspend less than .5%.


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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 isused only for lighting).Electricity costs 15.2 Rs/ month.Indian government needs about $100 billion US dollars to meet powerrequirements 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 greatimprovement over fuelwood fires that are traditionally used.Biomass is the use of cow dung for fuel. Cow dung smoke is toxic, but is oftenused because it is free. Educated people tend to use petroleum-based fuel for alltheir cooking rather than biomass. Non-smoking women in India exposed toeveryday biomass smoke had equally high death rates from chronic respiratorydiseases as male heavy smokers.The government also uses vegetable waste (like coconut shells and sugar canestalks) as fuel for thermal-energy power plants. Efforts are being made to createnew 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 lowinterest rate loan from the Indian Renewable Energy Development AgencyLimited (IREDA). The government currently uses education programs to promotethese new technologies of rural people.With 300 sunny days and 5000 trillion KwH of solar radiation per year, solarpower is a very viable option in India. India is the world's third largest producer ofPhotovoltaic 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 suchdeployment in the developing world. In many parts of the country there are ruralenergy co- operatives. Sagar Island in West Bengal will be electrified entirely onsolar energy by 2012.India ranks fourth in the world for wind power capacity (1,025 MW), and there isan estimated potential of about 20,000 MW of wind power. Furthermore, Indiahas its own turbine industry. To promote wind energy, the government is willingto provide soft loans to both manufacturers and installers of wind farms.

Sources:

1. "Energy." India Information, Embassy of India 2000. 17 Feb.2003

2. "Energy Strategies for Rural India: Evidence from Six States." Joint UNDP/World Bank Energy Sector Management Assistance Programme. Aug. 2002 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 inrenewable energy technology for the power sector. Potential partnerships with current


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government projects could be invaluable in easing the distribution and sale of LEDlighting systems providing insight into how to successfully reach the impoverished.

The Power for All Initiative:

Announced earlier this year by Prime Minister VaipayeeBy 2012, the government plans to connect all rural villages to power usingrenewable 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 andproviding electricity to 25% of non-electrified rural villages by 2012. If thesegoals are achieved, a 11.6% power deficit will remain. It is believed that demandwill increase two to three fold over the next twenty years.The government will provide incentives for research, development, anddemonstration of new technologies, market development, and laws prescribing a

minimum of renewable energy in each state.

Sources:

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

3. Composite User and Regional Information

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


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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 districthave 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 2unmarried sisters, her husband, his brother, her niece and nephew, and her own twochildren. She has no concept of privacy or personal space; everyone in the familyknows each other's businesses.

Jyoti's family owns a camel which she rides to larger villages to get daily goods suchas soap and vegetables. Her family grows wheat, but the monsoon rains are aconstant source of worry. If the rains are too light, the harvest will be low and the dryseason will be hard for the family. She never went to school and is illiterate, but shesends her kids to the government school, despite expensive fees. She lives in a mudhouse 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 gasstove. 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 electricityfor that purpose as well.

Environment in Rajasthan

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


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Months from October to February are very cold, while it is very hot betweenMarch 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 thesoutheastern part of the state receives 650 mm (26 in) annually, most of whichfalls 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) froma Public Distribution System (PDS) shop and purchase other householdessentials 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 availableis 2-3 hours/ day, usually at night. Furthermore, the timings of supply areunknown; 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 to15 years. This leads people to resort to theft.90 percent of the villages in Rajasthan are connected to the power grid, but over60 percent of the households do not have electricity.Rajasthan is the first state to begin achieving the targets of solar ruralelectrification.The Union Ministry of Non-Conventional Energy Sources has allotted 5,000 solarhome 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 underthe Solar Rural Electrification Program. One solar panel is installed on the roof ofeach beneficiary's house which is connected to battery. Two fixtures andswitches are installed in every house.The system supplies electricity regularly for three to four hours daily. Even in theabsence of sunlight, the system can supply electricity for up to three to fourdays.Rajasthan has a 294.9 kWh per capita per year electricity consumption. This isless 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 60Wincandescent used one hour every-other day). (Indiastat, 2003)

Economic and Political Conditions in Rajasthan


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Politics

Administratively, Rajasthan is further subdivided into 32 districts, which arefurther 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 electioncommission.Rajasthanis in 1997 received the right to all panchayat-related documents, andin 2000 received the right to information in all spheres of governance with thehelp of the NGO MKSS (Madzoor Kisan Shakti Sangathan).Nearly all villagers vote, yet women, people from tribal areas, and the landlesshave 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 areassociated with the sarpanch's (leader's) family. Corruption among sarpanchs isrampant, and panchayat officials will not stop the corruption.Since 1994, 33% of panchayatas were women. Yet, if women are elected thesarpanchs, their husbands often have power instead.

Economics

Livestock breeding is the traditional subsistence strategy in western Rajasthanand, in principle, well attuned to its natural resource base. It is an importantsource of income for the poorer segments of the rural population with limited orno 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 helpout 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 tolight their homes and to use for cooking. Many women have chronic backproblems from carrying a 10kg (~20 lb) load on their heads every day.Candles and kerosene lamps are used at local temples,


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The idea of putting light in the shops in the market may appeal to villagersbecause they have to walk far to reach them at night. They might also appreciatea torch for walking at night.

Receptiveness to Technology

Televisions are valued.

Aspirations

People always want to own more land.Most parents would like to be able send both of their children to school andwould 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 ahigher caste.

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 March2003

3. The Hindu. http://hinduonnet.com/thehindu/2001/03/04/stories/1404221e.htm. 7March 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 200310. 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 theWest Bengal state. The two have four children - three girls and one boy. The village inwhich they live lacks electricity and other basic utilities. Abhik and his family live in asemi-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 othervillagers, Abhik is a subsistence rice farmer who lives on a day-to-day basis. The littlemoney 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 hisdaughters dowries. Abhik was fortunate enough to gather enough money to provide


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dowry for his eldest daughter, age twenty, to marry a local farmer. Abhik still has twoother 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 onlyson, Abhik and Indra are trying hard to keep him in school for the longest period oftime that they can afford. Abhik and Indra were able to send their daughters to schooluntil age twelve, but they are hoping to keep their son in school for another year untilhe turns fifteen. They are very proud of their childrens education, because theythemselves are both illiterate. They were unable to keep their daughters in school for alonger period of time because they were needed at home to help with the household

and field work.

Abhiks mother also lives with the family. She is sixty-five years old. Her husband(Abhiks father) died nine years ago. Besides their four children, Abhik and Indra alsohad 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 helpwith this task. Since the village in which Indra and Abhik live is not connected to theelectrical 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 touse it very sparingly, and he mainly uses it when he needs to fix his farming tools atnight. 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, theybarely 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 highestpopulation 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


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south. On the plains, the monsoon season runs from June to September bringingfloods 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 theruggedness of our product, with snow in the mountainous regions and hot, humidsummers in the southern region.

Living Conditions

People in rural West Bengal villages tend to live in mud thatched homes with dirtfloors.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 haveno 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 willhave to do some lengthy walking.

Economic Conditions in West Bengal

The most common occupation is agriculture. Rice is a particularly profitable crop inparts of the state. Many people also make crafts (jewelry, rugs, baskets) to sell on thestreets 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 todecrease over the next few decades. (International Institute for PopulationStudies, 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% ofthese women work for cash. (International Institute for Population Studies, 2001)

Health

The government successfully dispense general health information by radio. Forexample, it was public announcements on family planning that has led to adecrease in family size.Many people are malnourished. 67% of women are anemic, and 48% of childrenare underweight. (International Institute for Population Studies, 2001)The infant mortality rate (under the age of 5) is 67.6%. (International Institute forPopulation Studies, 2001)


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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 familiesearn money.

Religion

The majority of West Bengal residents are Hindu.While the caste system is in effect in some areas, a tribal system divides peoplein 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 familyincome.People are generally open to outside technology.

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. 9March 20033. 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, 20015. 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 alocal level by small shopowners. People are willing to take risks if they have access tothe 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 localdetails that a foreigner may not know.


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A completely foreign-owned company.

These are more difficult to maintain. It is also more likely that the investor will betroubled by government bureaucracy.

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 internationalstructure that determines how our organization behaves.

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

1. Dealing with suppliers (LED manufacturers, raw materials providers, electricalcomponent 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.

Such a model makes Light Up The World a hub for materials, resources, andinformation that all domestic subsidiaries can utilize when necessary. The amount ofsupport Light Up The World will provide its subsidiaries and the support these


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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 thesubsidiary with working knowledge of the people in that region and a labor force todeploy the product. Ideally, the regional departments would also stimulate some formof local microenterprise.

4.3 Manufacturing

It is unclear whether or not it would be beneficial to manufacture in India. While at firstIndia may seem to have a favorable manufacturing environment, the World Banknotes 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&Ddevelopment in energy storage, lighting, and alternate energy sources into ourproject.India's natural resources could be utilized.

There are potential government subsidies for manufacturing renewable energyproducts.Cheap labor (though potentially not as cheap as some other areas) exists inIndia. A large portion of the labor force is also technically-trained and speaksEnglish.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) inother countries. In 1999, Foreign Direct Investment made up .5% of India's GDPcompared 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 mindBusinesses are subject to frequent visits by state officials. 15.9% ofmanagement time is taken to deal with government officials on regulatoryadministrative issues. This is compared to 11.4% in China, 4.3% in LatinAmerica, and 5.8% in OECD countries.

There are long delays at customs houses: India averages 10.3 days comparedto 7 days in ThailandThere is a poor supply of power. 45% of surveyed Indian firms had their owngenerators, a figure which is very high by international standardsWith an average interest cost of sales (per rupee) of 5.5%, Indian manufacturinguncompetitiveIndia 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

4.4 Distribution

India has an extensive rail network, and a strong road infrastructure that is constantlygrowing. Villages are short distances apart from one another. The government hasextensive distribution network in place. For locales near cities, there is a constant flowof goods between the city and village. For more rural or remote areas, there is a


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strong distribution network available through the existing structure established forcooking fuels.

Possible Methods of Distribution:

We can sell our product directly to the government and allow them to distributevia their established network. This allows us to focus on other concerns besidesdistribution. However, there are a few disadvantages to this method. If there is ashortage 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 forus. This allows us to have a greater degree of control in where our product isdistributed through their network than we would have if we worked with thegovernment. However, extra expenses may be required to acquire thepartnership.We can have a centralized sales force of traveling salesmen that travel aroundthe country selling our product. This gives us maximum control in distributionbecause we direct salesmen where to go. However, it may be cumbersome andcostly to find and train a sales force.

4.5 Local Financing

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

MFI's in India:

Asian Development BankGrameen Foundation

4.6 Micro-Enterprise

There is a strong entrepreneurial climate in India so working with local entrepreneurswill not be a problem. Providing start-up capital and resources, such as training onhow 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 salesforce; the government will do their own marketing.

Current Methods of Information Dispersal to Rural/Remote Villages

RadioWord of MouthTelevisionNewspapers and Written MediaWritten Signs

4.8 User-Business Relationship

Traditionally after the product is sold, few services are provided. Many people fix


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things themselves or call someone they know for assistance. However, it would bemost 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 ruralIndia have failed because they did not provide maintenance and repair of theirproject.Warranty. This might be what encourages our users to invest in our light.

4.9 Possibilities in Partnerships

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

Indian Government (State or National)Various Electric CompaniesKerosene/Petroleum CompaniesIndian Cricket Team/Bollywood StarsPetroleum Conservation Research Association

Specific Potential Partners

Indian Renewable Energy Development Agency (IREDA)Tata Energy Research Institute (TERI)The Grameen Bank: offers microfinancingBarefoot College (Rajasthan, India): trains local women in how to maintain andservice solar energy panels

Sources:

1. Indian Department for Industrial Promotion. http://dipp.nic.in/. 8 March 20032. Personal Interviews. Achal Garg3. Personal Interviews. Akhil Gupta4. Press and Information, Embassy of India. Embassy of India, Washington D.C.

www.indianembassy.org. 9 March 20035. 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 ourunderstanding of our users, we have generated two business models that we feelwould be successful in India. In addition to the Crafts for Lights Model and the LightTechnician 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


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is maintained. They will also manage the international supply chain, negotiatediscounts from manufacturers/suppliers, and manage the direction of internationalfunds for new projects from established, already successful branches of theorganization.

India Headquarters:

The India Headquarters can be a branch created by LUTW or it can be a partner inIndia. 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 wouldbe 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 generatesufficient 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 unitswith them to distribute. Thus the selection process for our craftspeople and distributionis 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 thebusiness 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


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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. Theservicing/maintenance aspect can be extracted and used independently of the

complete model below, which also incorporates sales and marketing for themicroenterprise.

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 inthe city and have the women come get it from us. For more remote villages, the unitswill be shipped to the closest city and then sent to the villages by utilizing existingcooking 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 tosustain this as a full-time job.

Strengths:

Training in other electrical areas generates more wealth than from service of oneproduct.

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-scaleelectrification and lighting systemsEach village will have to be approached individually, and will require significanttime to train her.

5.3 Key Assumptions/Deliverable Specifications


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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: $4Fixture for lamp: $1Cost of battery: $4Estimated battery life: 1 yearDistribution/Manufacturing of battery: $1.00Battery maintenance cost: $0.50 / yearPV 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: $50.50Supplies to start: $10Training for sales force: $10 per person + salaryTraining for maintenance: $10 per person

Micro-Enterprise Revenue

Average time involved to make one piece of art: 30Our selling price to partners for such a piece of art: $60Amount given to artist till investment recovered: $25

Amount to LUTW till investment recovered: $35Time to recover initial investment: 2 pieces of art soldAmount given to artist after investment recovered: $45Amount to LUTW after investment recovered: $15

Maintenance Revenue

Electrical appliances needing repair a week: 10Price per repair: $0.50

Total revenue per week: $5.00Weeks 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 artworkmakes the scalability of this model somewhat questionable. If we can create a marketfor the artwork or sell it directly to resellers, we can quickly recover our investments.


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Light Technician Model

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

Maintenance Revenue

Electrical appliances needing repair a week: 10Price per repair: $0.50Total revenue per week: $5.00Weeks 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 peopleAverage size of customer base: 300 peoplePrice charged per lamp: $8Profit per light: $0.75Profit 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 ofuse)Total cost per year to LUTW: 20 lights x $15 per light = $300Stipend for batteries-for-books program: $2 per batteryTotal cost per year to LUTW: 200 x $2 = $400Total = $400 per year (first 5 years)Total = $700 per year (after 5 years and the used lights come back to us)

Sources:

1. Indian Department for Industrial Promotion. http://dipp.nic.in/. 8 March 20032. Personal Interviews. Achal Garg3. Personal Interviews. Akhil Gupta4. 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

CIA. The CIA World Fact Book: India.http://www.cia.gov/cia/publications/factbook/geos/in.html. 10 Feb. 2003Datanet India Pvt. Ltd. IndiaStat.com. www.indiastat.com. 7 Feb. 2003


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"Energy." India Information, Embassy of India 2000. 17 Feb.2003"Energy Strategies for Rural India: Evidence from Six States." Joint UNDP/World Bank Energy Sector Management Assistance Programme. Aug. 2002 2 March 2003The Fix. Welcome to India. www.welcometoindia.com. 3 Feb. 2003Malhorta, 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. 2003The 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 2003Dasgupta, Sourav and Sudeshna Dasgupta. "Bengal Web."http://www.bengalweb.com/intro/wbengeo3.html. 9 March 2003Embassy of India, Washington D.C.http://www.indianembassy.org/indiaingo/india_2000/chapters/chp17.pdf. 7 March2003The Hindu. http://hinduonnet.com/thehindu/2001/03/04/stories/1404221e.htm. 7March 2003IndiaChild. "Indian Villages." http://www.indianchild.com/indian_villages.htm. 9March 2003

Israel, Samuel ed. Crafts of West Bengal. Grantha Coporation: Middletown, NewJersey, 1994.IndiaStat.com. www.indiastat.com. 7 March 2003IndiaTogeter.Org. http://www.indiatogether.org/govt/ocal/articles/arc-rahasthan.htm. 7 March 2003National Family Health Survey, 1998-1999. International Institute for PopulationSciences: Mumbai, 2001Pegu, Rink. The Week. "Packing a Punch." http://www.the-week.com/99nov21/events2.htm. 7 March 2003Rajasthan Travel Tours. http://www.rajasthan-travel-tours.com/rajasthan-

climate/. 7 March 2003United Nations Development Programmme. "Chasing a Right."http://www.undp.org/governance/docsaccess/chasing_a_right.pdf. 7 March 2003Vetwork UK. http://www.vetwork.org.uk/ilsel.htm. 7 March 2003The 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 2003Personal Interviews. Achal GargPersonal Interviews. Akhil GuptaPress and Information, Embassy of India. Embassy of India, Washington D.C.www.indianembassy.org. 9 March 2003


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Section 5: Business Model

Indian Department for Industrial Promotion. http://dipp.nic.in/. 8 March 2003Personal Interviews. Achal GargPersonal Interviews. Akhil GuptaPress and Information, Embassy of India. Embassy of India, Washington D.C.www.indianembassy.org. 9 March 2003

Briefing Book Table of Contents
http://validator.w3.org/check/refererhttp://cee45q.stanford.edu/2003/briefing_book/contents.html

india - various information

Documents