Sramana Mitra: What is your current analysis of the big problems in India? In the same vein that your colleagues went and sought out the Oyo team or founder, what are some problems out there that you are looking for solutions to or teams that are solving these problems?
Hemant Mohapatra: There are three things that I, personally, find really exciting. One is FinTech. India is more advanced than most other countries. Maybe China’s the only other talent that comes to mind. These have trended in the last couple of years.
The fintech regulation or adoption is just stupendous. Now that the basic problems of payments have been taken care of to a large degree by both policy as well as product, the next challenge is around what other financial products would be useful.
Lending seems to be another thing that people need. On a buyer side, they need EMIs, for example. For the seller side, they need working capital. The platforms are evolving into how you can create more liquidity on both sides of the marketplaces to facilitate exchange of goods and values. So that piece is big.
Now with lending comes other challenges around collections and risks in our bag. There are companies that we built to solve it horizontally. That’s one category I’m looking at.
Second is around logistics. India doesn’t have the best road network. It’s not like the US and China. Railway network is pretty advanced but a lot of it is very manual and very inefficient. A lot of work happens when you shift from one state to another and so on and so forth.
The policy is coming in to make the transfer of goods easier from a taxation perspective, but the actual nuts and bolts of logistics are very inefficient. An example would be, there’s no electronic way to confirm a receipt of package that comes in a truck.
The company is figuring out what is an electronic bill. How do you make that foolproof and fraud proof? That’s an opportunity. Logistics is super inefficient but a very large addressable market in India.
Third is agriculture. 70% of GDP in India is agriculture but very old technologies are still used. They use animals to till the land; not even tractors. The tractor penetration in India is 4% of the overall land developed. You would think you can’t do anything without a tractor.
The people do it by hand with cows and bulls. They till land like that. Drip irrigation doesn’t really exist much beyond a certain category of farming. So we’re even thinking about supply chain for farming. It’s super inefficient.
You have three or four players before the produce gets to the market and the end consumer. They have village level aggregators, regional aggregators, on land aggregators, state aggregators, and then national. Then supply goes back to tier-1 or tier-2 cities. Then export and import. A lot of this is completely opaque.
Who gets what prices? Who does negotiations? Who does supply chain? Where’re my goods? What are the risks? How do I price it on a daily basis or weekly basis? Nobody has any clue.
So the companies will solve that and will probably become really integrated into the overall supply chain for agriculture as a whole and become really valuable companies.
Sramana Mitra: The amount of waste in the agricultural supply chain is unbelievable.
Hemant Mohapatra: I realize that a lot of waste is not in transportation. It’s actually at the standing cropland because of bad irrigation techniques, misunderstanding demand – overproducing or under producing – or fertilizers applied at the wrong time, or overuse of pesticides.
Things like that is where a lot of the crop gets lost. It is not in the classification network surprisingly.