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Online Extra: India's Cell-Phone Ride Out of Poverty


Times are good for Ganesh Bicchwe. The festival season in India is around the corner, and in Maheshwar, a hand-loom weaving center in the central India state of Madhya Pradesh, master weaver Bicchwe's Nokia (NOK) 3310 mobile phone is ringing busily. A garment store in New Delhi wants 500 scarves—the broad, 3-meter-long, intricately designed, fine cotton ones worn across the shoulders by Indian women—in 20 days.

A yarn supplier phones from Coimbatore in south India to say he's dispatching a consignment of raw material ordered by Bicchwe that very evening. Then, an exhibition organizer phones from Mumbai to find out whether Bicchwe can put up a stall at the site. It's a huge amount of work for Bicchwe and his staff of 35 weavers who are all working 12-hour shifts. "The pressure to deliver is mounting," says Bicchwe, with a broad grin on his face.

Bicchwe, 50, is hardworking and enterprising, but he's the first to admit that he wouldn't enjoy his current level of success were it not for his cell phone. He is from the weaver caste—at the center of India's international trade in textiles in the 19th century before it lost out to industrialization. It now occupies India's lowest economic rung. It wasn't so long ago that Bicchwe was a small-time weaver and trader, getting piecemeal work and barely eking out a living. But that was before cell phones. Hardly anyone in his town had a traditional wire-line phone.

SUCCESS BY ALL MEASURES. Then, in 2005, Bicchwe spent a precious $100 to buy himself a mobile phone. It was a huge investment, but Bicchwe wagered that it could enhance his business. Did it ever. Getting connected has allowed Bicchwe to become a player in India's reviving textile business and in the booming domestic consumer market. His business has more than doubled, from $12,000 in sales to $25,000 a year. He has his own home and a separate work space, and he has expanded his business—from 15 looms in 2005 to 35 now. The other weavers he employs create 20,000 meters of exquisite hand-woven fabric a year, twice that produced two years ago.

His success has also enabled Bicchwe to become a consumer in his own right. Among his recent purchases are a 14-inch TV set, a Maruti Suzuki

car, and a second-hand computer with Internet access. In a true sign of middle-class success in India, Bicchwe married off his daughter in reasonable style. And his 28-year-old son has joined the business, rather than strike out on his own.

Bicchwe has big plans for the future, and his trusty cell phone could make the difference. He wants to add another 15 looms this year; doing so would increase business and income by 30%. The phone helps wrap up deals within minutes rather than the two weeks it typically took to get in touch with suppliers and customers through letters and a single wire-line phone at the local village store. "It's been a life-changing and time-saving experience for me," he says, affectionately patting his handset.

A LOAN FOR A PHONE. Bicchwe has plenty of company, including the 1,500 other independent weavers (both master weavers like Bicchwe and others) in Maheshwar. But all sorts of other small entrepreneurs in rural areas are also seeing their lives improve. Aruna Gaikwad, 29, is a semiliterate fruit and vegetable vendor in Kokrade village, 270 miles from Mumbai. Her husband used to sell their goods from two stalls on the village pavement, while she tried to make sales in the markets of neighboring villages. It was a life of struggle, providing only about $60 in monthly income for the couple and their two children.

Gaikwad, however, had seen how mobile phones had helped some of her friends strengthen their small businesses and become wealthier. So last year, Gaikwad bought a $34 phone with a loan from the local Mann Deshi Mahila Sarkar Bank for women, which provides credit to rural entrepreneurs.

Today, thanks to her phone, Gaikwad no longer has to rely on local traders to give her a decent price on fresh produce, but can deal directly with wholesalers a few towns away. When there's glut of mangoes, for example, she is able to plan her pricing ahead of time. And instead of seeking customers, she now takes orders over the phone, sometimes a day in advance.

THE FIFTH NECESSITY. The better time management also allows her to expand her inventory of fruits and vegetables. Gaikwad's monthly income doubled to $122, and she has become creditworthy for large loans from her local bank. Two months ago, she took out a $2,400 housing loan to move from her straw hut to a cement home. She also owns a TV, and repays her home loan with weekly installments of $24. "This is very liberating," she says.

Such life improvements due to mobile telephony are becoming commonplace in rural India, where for many, basics like going to a doctor or to school still entail a five-mile walk. No wonder, then, that India is the fastest-growing telecom market. Both handset and service providers continue to lower the cost of their products. According to Sanjeev Aga, managing director of local Idea Cellular

, a mobile phone has become the fifth most important household expenditure item after food, clothing, shelter, and education.

"As their aspirations grow, even the poor don't mind setting aside $30 of their paltry $150 monthly income for a mobile phone," he says. India now has a total subscriber base of 190 million, with 6 million new users joining the ranks every month. By next year, two-thirds of Indians will own a mobile phone according to the Indian Cellular Assn., with the subscriber base reaching 450 million by 2010. And, says ICA President Pankaj Mohindroo, "Most of the sales will come from rural India."

"THE REAL DIGITAL REVOLUTION." Dominating the mobile handset landscape in India is Nokia with a 74% market share. As for service providers, at last count, there were 13 mobile-phone operators, with Bharti Airtel

leading the pack with a 24% share and Vodafone (VOD) in third place with a 17% share.

Almost all the players who have a large urban base in India are expanding rapidly into the rural areas by providing innovative services. For instance, Bharti runs a pilot project for farmers in the northern state of Uttar Pradesh, providing much needed voice and text tips on farming and animal husbandry and the availability of easy loans, and weather forecasts twice a day. "This," says Aditya Dev Sood, chief executive of Bangalore design research firm Center for Knowledge Societies, which brought out a Nokia-commissioned mobile development report, "is the real digital revolution." By Nandini Lakshman


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