Logistics startups can drive more with Budget 2017

It has unlocked railways to partner with last mile delivery companies

The Union Budget 2017 has earmarked Rs 2,41,347 crore for the transportation industry. Of this outlay, Rs 1 lakh crore is for the railways while Rs 64,000 crore is going to be provided to build national highways. But one announcement that has roused a good deal of excitement in the startup space in this respect is that logistics startups, like HipShip, and young logistics companies, like Delhivery, Blackbuck, Rivigo and Shadowfax, will be allowed to use the railways for end-to-end solutions.

Now, this means that they can tap into what Assocham predicts is a $300 billion opportunity. The government wants to encourage the movement of perishable goods across the country in special containers, and these special commodity shipments will have reduced rates for fruits and vegetables to be transported across the country on rail. A startup will manage the solution end-to-end.

For example, one tonne of oranges could be shipped by a startup from the farm to the closest train station, at Rs 3 per kilometre, and be loaded onto special perishable containers. When the train reaches its destination, the same startup will pick up the items, at the same cost, and ship them off to their warehouses. From there, the produce will be sent out to the kiranas and retailers. These services will be based on technology and will have the smartphone at the centre of the ordering mechanism. Here, startups like Mobisy, WeavedIn and Zetagile can help in the order capturing and work with these delivery companies.

“Startups with a technology play, if they aggregate third party logistics companies and warehouse companies, can benefit by working with the railways. But these startups must be ready to handle large volumes,” says Ankit Sethia, founder of HipShip, a tech-based shipping startup.

The government is also going to help by adding Bharat Net, a scheme where optic fiber is going to be added along the railway track. This will allow startups to enable their clients to track their product from the source.

“This budget has been progressive not just because of the tax reductions to startups and SMBs. We, as tech and logistics companies, can work on large volumes,” says Anish Basuroy, founder of Shotang.

Hopefully, the Rs 1 lakh crore sanctioned will be put to good use, and without the bureaucracy, startups can surely work with the railways to handle cargo transport across the country.