Observations on Indian Payments & Supply Chain
Some observations on what’s to come
I am in India this week visiting family who cannot make my wedding next spring. It is my first visit in six and a half years and things are drastically different. A few observations as it pertains to the moving of people and packages and purchase of goods and services.
- Moving to a cashless economy will be slow. Prime Minister Modi announced the retirement of 500 and 1,000 bills last week which was set to root out black money. New bills aren’t plentiful, shopkeeps can’t provide change, and many small value services providers are suffering. That being said, this seems like a big push to encourage the use of electronic payments. Electronic payments are traceable and easier to scale to rural areas- increasing the level of availability and trust. While poorer rural areas are adopting such mediums, I believe that in the next 5 years, more of the rising middle class will opt for phones over plastic. If I had to guess, this trend will move to businesses rather quickly from that point
- Blockchain could be a way that trust is brought to real estate, banking, and insurance. Adoption is the issue with any product, but the people here are demanding improved protections and trust. It makes me believe that with certain agency cooperation, providers could test deed, trust, currency, bond, and personal line policies with select customer segments. The federal push to stifle fraud, corruption, and illegal activities makes me confident this could be a possibility
- Lorries not trailers own the long haul game. In US and Europe trailers are commonplace, but lorries (see lorry lot above) own the roads here. While some operate in fleets, many are also independent — not different from the US. They are broadly disliked due to their rash and negligent driving. They are often filled to the brim with all types of goods: plastics, grains, metal, textiles, etc, which makes me think there is room and will continue to be room for added capacity. Trailers likely won't ever work due to the tight cities — unless there is a shift to an outer city DC that meets short haul/last mile. The highway system is maturing to the point where trailers might work and autonomous might be easier to introduce provided traffic laws are followed and enforced
- Last mile seems chaotic but relatively mature and reliable. Auto rickshaws and scooters have long been commonplace in India — with variations used to deliver propane, packages, small crates, food and more. This has been the case as long as I can remember — more manual when I was five years old vs now. It seems chaotic, but customers, including businesses, claim that reliability has always been high. It leaves one to question a couple things: 1) should we study these systems as we look develop routing systems for autonomous fleets? and 2) what will autonomous last mile look like in a place where pick up/drop offs are on top of each other?
- Electric-powered mobility opportunity is huge. The pollution is bad, and most people get around on two wheelers or small cars. Both of which have several electric iterations abroad. If performance and cost can match current carbon-powered models, mobility providers can make a killing. Do the rough math assuming 200-350M can afford a vehicle 3-4x during their lifetime...HUGE
- Ola and Uber are market changing forces. I was in shock to see the broad adoption of Ola and Uber, which are disrupting the auto rickshaws, age old Ambassador cabs, and car ownership. At INR 3/km in some areas, it is tough to beat and provides a valuable, trustworthy revenue stream for drivers. It will be interesting to see if they can totally erode the rickshaws that tend to complicate traffic due to small sizes that lend to rash driving and above market prices. I would bet in 10 years auto rickshaws stick to transporting goods not people
Interesting to see the backbone and foundational products and services develop and evolve in an emerging economy. Much of the manual and offline offerings will be totally skipped in a nation that develops a large share of the world's technical talent.
Note: spent my time primarily in the south -- regional vagaries do exist.
Originally posted on santoshsankar.com.