Government investment: A boon for start-ups?

In the draft National Logistics Policy (NLP), the Ministry of Commerce has set up a separate fund for start-ups in the logistics sector. gets the industry’s reaction on the announcement to understand how this move will help boost the start-ups sector and

Kushal Nahata CEO & Co-founder, FarEye

The logistics sector in India is undergoing an unprecedented transformation, fuelled by innovations in IT and digitalisation, coupled with robust government policies. Digitalising core logistics processes is key when it comes to building a reliable supply chain. The government’s plans to create a non-lapsable logistics fund to develop multimodal logistics parks, enabling first and last-mile projects besides setting up a start-up acceleration fund to help incubate start-ups in the logistics sector, is definitely a welcoming move. Today, logistics startups, including us, work towards increasing efficiency in logistics processes by leveraging technologies such as the Internet of Things, machine learning, telematics, and Big Data analytics. These technologies help us add value by gathering relevant data from across the supply chain and add predictability. This enables companies to increase overall efficiency, cut costs, and increase their profitability with greater visibility over freight movement. The policy, once implemented, would provide further impetus to start-ups, enable quick implementation of technology projects in government initiatives, and also lead to employment generation in the logistics sector. The fund will help passionate entrepreneurs in carving their success stories and will go a long way in digitalising India’s logistics sector. The government’s plan to create a data and analytics centre will enable data-driven decision-making for future infrastructure projects.

Soham Chokshi CEO, Shipsy

Having a separate fund for logistics-related start-ups is indeed a move by the government in the right direction. There is a need for easier access to capital to help business set up their basic infrastructure. While there are angel networks and other VC funds, having the government come in would mean that the pool of capital is available to start-ups in all areas and not just metro or Tier-I cities. However, the outcome of this new initiative would depend much on its execution. We hope that the government makes it easy for start-ups to access this pool of capital and that it does not become a case of just fund allotment but no disbursal. If done correctly, I’m certain that it would reduce first-mile and last-mile costs, drastically bringing down the logistics cost overall. It would also lead to inclusivity for poorlyserviced remote areas. There is a need for start-ups to bring in technology to digitise logistics processes. A lot of work is needed to standardise communication across different entities in the logistics ecosystem and enhance visibility across the supply chain. I believe that what companies in this space truly need in addition to capital is the support of the government in terms of easy access to paid projects, which would give a chance to compete with older and more established players based on merit. Having the government as a customer in addition to an investor would be extremely beneficial to start-ups trying to create value in the ecosystem.

Sunu Mathew Managing Director, LEAP India

This is a well-thought-out initiative by the government and a much-needed impetus to the logistics industry which is the bloodline and backbone of goods movement across the country. Many of these newly funded start-ups will leverage latest technology and develop infrastructure to optimise and aggregate first and last-mile connectivity that drive down costs and enhance customer service levels. This is a real game changer, indeed. I also expect mid-mile load factor consolidation leading to usage of high capacity vehicles and palletized goods movement across the country. I foresee some new start-ups focused on technologies like IoT, blockchain and fintech enable building a robust virtual information highway that enables seamless interstate and intra-state movement of goods and services at reduced costs, lower damages, lesser lead time, and greater controls. Aggregation and consolidation in the logistics sector will boost existing and new start-ups that provide shared services and equipment such as modern warehouses, differential capacity vehicles, robust material handling equipment like pallets and crates, racking systems, technology and supply chain solutions providers. This will create more jobs, enhanced manpower skilling, and an end-to-end supply chain ecosystem in India.

Abhishek Bansal Co-Founder & CEO, Shadowfax

We welcome this initiative since it will help spur a lot of technological and process innovation in the sector. It would make it easier for start-ups to reach out to SMEs with their services and would also help create meaningful employment across the value chain, be it first mile, last mile, or warehousing. It will help start-ups attract talent from the best colleges in order to solve the unique challenges in the logistics sector. Anjani Mandal CEO and Co-founder, Fortigo Network The recommendation to have a separate fund for start-ups in the draft of the National Logistics Policy has the potential to provide significant value addition to the logistics sector. The policy clearly states the intent towards moving to a ‘digital logistics’ ecosystem. With start-ups playing their role in leveraging technology in every sector, a separate fund for start-ups in the sector will encourage them to tap the potential of the transformation to digital logistics. There lies a huge potential for the sector to grow and there is a lot the start-up community can contribute. However, the success will be based on the criteria for selecting the start-ups and the actual implementation of the stated intent.