While India’s e-commerce industry continues to gallop to a likely $32 billion by 2020, a glaring gap is their logistics infrastructure. At the same time, there is an organisation with an all-India logistics infrastructure, especially in rural India where e-commerce is at its infancy, but that organisation makes R6,000 crore of losses each year. Put the two together, and you can create magic, literally. That’s what information and technology minister Ravi Shankar Prasad is trying to do while meeting the India heads of firms like Amazon and Flipkart. Whether the move succeeds or not is to be seen—India Post tied up with banks some years ago to sell mutual funds but not too much came of it—but certainly India Post is uniquely positioned to take advantage of the marriage, should it be solemnised. It has a network of 1.6 lakh post offices, the bulk of which are in rural areas. And, once the prime minister’s Digital India plan takes off, India Post will be at the heart of the programme which will connect 2.5 lakh panchayats digitally. What makes the proposed tie up between India Post and e-commerce firms more believable is that
Alibaba has managed to do quite the same with China Post—India Post has more post offices than China Post has. China’s largest e-commerce firm successfully shares warehouses with China Post and uses its processing centres and delivery workhouses—Amazon and Flipkart can well replicate this model.
Of course, having the wherewithal and achieving goals are two different things. Let’s not forget that, had it not been for India Post’s famed inefficiency, India’s successful courier industry would never have taken off—the fact is that, given a choice, people would rather use private couriers than India Post. While India Post is best suited for financial inclusion, it remains a fact that the finance ministry vigorously opposed it applying for a bank license—while it remains to be seen whether RBI considers it as a payments bank, it remains true that the big public sector banks have not used India Post to complete their banking correspondent networks either. While it is in the interests of firms like Amazon and Flipkart to work with India Post, it is up to the latter and its 4.66 lakh postmen to make it happen. And until India Post rises to the challenge of modernising itself, it is unlikely it will get far in its quest to become a payments bank either.