U.S. CORPORATIONS BEGIN EAST INDIA'S RURAL CONNECTIVITY

UNCLAS SECTION 01 OF 02 CALCUTTA 000211

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID EINV SOCI PHUM IN
SUBJECT: U.S. CORPORATIONS BEGIN EAST INDIA'S RURAL CONNECTIVITY
INITIATIVE



1. (SBU) SUMMARY: To bridge the digital divide between the
India's high-tech urban centers and its vast rural hinterland,
Microsoft Corporation (Microsoft) is working with the GOI and
state governments to establish Internet Technology (IT)
connectivity in 100,000 villages around the country. Pilot and
developed programs from this project are already being initiated
in parts of East and North East India. Microsoft is also
working with other U.S. corporations such as Intel, Dupont,
United Telecom and Hughes Telecom to supply hardware and
software. As part of its eGovernance plan, the GOI hopes that a
wired rural India will lead to better citizen services and more
employment opportunities. Microsoft considers this effort a
good business model for bringing about rural connectivity as
well as providing critical public services in underdeveloped
parts of India. Microsoft India Vice President Tarun Malik and
Project Manager Vineet Garg emphasized that this program is
intended to be self-sustaining and commercially viable. The
company stressed that this is not part of a Corporate Social
Responsibility (CSR) program as CSR initiatives can cripple the
self-sufficiency of the recipients if not managed properly.
This effort to bring IT connectivity in East and Northeast India
appears to be well coordinated and looks to offer great
potential for improving local government services and for
enhancing rural IT connectivity. End Summary.


2. (U) These kiosks will be run by local youths through a
public-private-partnership (PPP) model. The public sector will
provide the basic infrastructure and some aid for a limited
period, which will then be made sustainable through the private
initiatives of the local youths. The state governments and GOI
believe that the PPP arrangement will make these kiosks viable
and promote village level entrepreneurship and employment.
These kiosks will be in place by the end of 2007. Microsoft is
funding 50,000 kiosks under an initiative called Saksham
(meaning `able') and is working with other U.S. companies, like
Intel, Dupont, United Telecom and Hughes Telecom to provide all
the information technology software and hardware components as
well as develop network links for such kiosks. The CSC project
is a part of India's National eGovernance Plan, which featured
in UPA's Common Minimum Program to bring information and
government services at the doorstep of rural citizens.


3. (U) The CSC scheme will have 3-tiers. At the bottom of the
pyramid will be the local Village Entrepreneurs or VLEs -
loosely similar to a franchisee. At the second level will be
the Service Center Agencies (SCA) that acts more like a
franchiser. At the top level would be State Level Agency (SLA)
to be selected by the state government to implement and monitor
the scheme within the state.


4. (SBU) Microsoft is collaborating with DIT as the lead agency
in the project. In their interaction with ConGen, Microsoft
officials were unwilling to disclose the full value of
investment but indicated that it was part of the USD 400 million
digital inclusion program announced by Microsoft Chairman and
Chief Software Architect Bill Gates during his several visits in
India. A number of U.S. companies like Intel, AMD, Dupont,
United Telecom and Hughes Telecom are also stakeholders and
investors in the project.

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Already Implementing in East and Northeast India
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5. (SBU) A pilot project to set up five kiosks is now being
implemented in two West Bengal districts. In Hooghly district,
work has begun to integrate land records with GIS mapping and
using biometric features (thumb impression). Microsoft is
expected to announce shortly its plan to develop an additional
5,000-6,000 kiosks in West Bengal.


6. (SBU) The CSC has already been implemented in Assam and also
in some parts of North East. Microsoft has built 350 kiosks in
the North East, where they are called Community Information
Centres (CIC). While power and connectivity remain problems,
some of the kiosks are reportedly functioning well. Microsoft

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will also build 8,000 kiosks in Orissa. In Bihar, the project
is still at the proposal stage, although Microsoft has funded
1,000 Education Centers as part of computer literacy Project
Shiksha (meaning "learning"). ConGen contacts in Microsoft
pointed out that the CSC project was financially viable and
sustainable as the stakeholding corporations are driven not by
corporate social responsibility but by the project's commercial
prospects.


7. (U) COMMENT: If the rural CSC program is fully implemented
as envisioned, it will bridge the information gap between
digitally disenfranchised rural communities and the more tech
accessible urban areas. The program will also bridge the gap
between rural consumers, the government and corporate service
providers. The franchise-like framework envisioned should
provide a commercially viable and sustainable approach by
creating financial incentives to the operators. In addition, it
will create potential employment for high unemployment areas
that would benefit the most from such initiatives. East and
Northeast India have been slow to see the fruits of India's IT
development and given the weak infrastructure and high poverty
levels, the states in this region have often been ignored by
private and public organizations. The efforts of Microsoft and
its partners to implement the CSC program reflects the
realization that more needs to be done to address social and
economic development in this region.
JARDINE