One of the most profit-making industries in India is the logistics industry. Given the startup culture in the country, anyone can start a logistics business in India, all they have to do is figure out how? So, to help you, we have crafted this extensive guide on how to start a transport business in India. Read more to know more!
The extensive connectivity across the nation plays a significant role in the emergence of several new affluent businesses. India is considered to be one of the fastest-growing economies, which has led to an increase in the scope of transport businesses in our country. The wider the transportation services will be, the better will be the connectivity. This will overall lead to prosperity as it helps to flourish the entire economy.
As per the increasing demand for efficient road and transportation systems of many businesses, the transportation system keeps on being constructed almost every day. This has made it possible for many new businesses to earn more by having better connectivity options. Not only this, but it has also provided a great opportunity to invest in the transport business for many new entrepreneurs.
As you all know the transport business is another form of communication from one place to another. Every person, not only in India but the whole world uses some form of transport to go from one place to another be it private or public transport.
What are the Important Aspects that should be Considered while Creating a Transport Business Plan?
Now before we get to know other things about the transportation business in India, let’s get to know basic steps while you are planning to set up a transportation business in India. You should scrutinize all the aspects that are mentioned below before hopping into the transportation industry-
1) Choose an ideal transportation business
This is the basic yet most significant decision that you need to make after all the evaluations are done considering every aspect. What will happen if you want to construct the building and its foundation is not built strong enough? Here, the building foundation refers to the decision that you need to take to choose the transportation business. It should be taken after conducting extensive research.
You can choose either a passenger transport or goods transport business. Goods transport businesses include freight or logistics services that may include transportation of any type of goods across different cities, states or countries. These goods can be related to the retail industry, wholesale businesses, raw material and ready-made goods for consumption. Whereas, passenger transport services include taxi services, public bus service, and other commercial vehicles used to transport passengers from one place to another.
2) Evaluate the pros and cons of the business
Once you have selected the type of transportation business you want to run, the next step is to write the business plan on paper after scrutinizing the pros and cons linked with that nature of business. Understanding your nature comprehensively also depends on the region that you are operating your business in. For example- if you are operating the truck transportation service from New Delhi, the rules and regulations may vary in every other state you are going to enter your truck into.
Hence, for being a successful business entrepreneur you need to include the fleet of vehicles. A couple of other things has to be taken into consideration such as enquiring about the loan schemes for setting up the business, shortest and widely-known routes, and linking yourself up to already established business entrepreneurs in the transportation business.
3) Fulfill all the legal requirements
Once you have evaluated and considered all aspects, now you fully know the nature of your business. Now, you need to get business registration done. You can register your business as a partnership firm, private limited company, OPC, SSI, MSME, and even as a limited liability partnership firm. You can visit your transportation business online and may contact the professional who may help you over online registration.
The next step is to contact the RTO for getting valid licenses and permits for the places you want to run your transport to and fro. Once you get the license and permits, you need to register it with local, state and national departments.
4) Take a loan (if required) and Invest in transport vehicles
This is quite an obvious step as once your business is registered, the next big step is to purchase the vehicles depending upon the nature of your business, whether it is passenger or goods oriented. Also, in case of a lack of funds, you can apply for the loan to purchase the vehicles needed to carry out your transportation business.
5) Establishing the business team
Whether you have opted for a passenger or goods transport business, you would need the drivers for both. Always ensure before hiring a driver that they are above 18 years of age with a legitimate license and sufficient driving experience. If they have on-the-job training certificate it adds as an advantage in their profile.
Once you have hired the proficient drivers, appointing the required customer care officials to solve the query of every customer is imperative. As customer services have become indispensable to ensure the efficient operations of every business. Likewise, it is equally important for the transportation business as well. Moreover, you also need a competent accounting team to manage your funds relatively well to determine the profits and losses for the overall smooth functioning.
As you can see boosting up of the competition in all the fields of businesses, likewise in the field of transport businesses. So many new startups and old big giants are established in this sector, that it has become difficult to compete with the popular competitors.
It has now become convenient for the MNC’s and foreign investors to enter into the Indian Transportation and Logistics sector after the liberalization of FDI (Foreign Direct Investment) norms. It is important to pay heed that these big giants can make huge investments in marketing, infrastructure, and promotion. Hence, it is very crucial to conduct proper research on the competitors and focusing on the organizations ranking in the market.
Significant Points to be taken into consideration after you have set up the Transport Business
After you have set up your business, there are other things that we want to enlighten you with. These important points that should be taken care of after you have set up your transportation business are as follows-
1) Business Risk
The transportation business is extremely dynamic and is always prone to any kind of misshapen be it on the road, water, or air. Various vendors or partners are involved in the entire operation and the danger of the risk is high. It is vital to cover the obligations be it of any kind under the insurance.
Many of you may not avoid insurance as being professionals and experienced entrepreneurs. As you may already know it is not a personal choice, but mandatory. You cannot run any vehicle on the road without insurance whether it is for personal or professional use.
Several insurance companies offer great deals of insurances depending upon the type of vehicle you want to buy the insurance for. The vehicle insurances assist in addressing a part of the liability concerns, that are usually not very potent. For example, most of the cargo and air insurance in India do not cover inventory shortages as it is considered to be a nominal risk while running a third-party transportation business. Henceforth, it is always recommended to go through the entire contract meticulously.
An option to install a GPS tracker that synchronizes with the car is also available these days. This turns out to be of great help to prevent theft or in case your vehicle is stolen.
2) Potential Clients
If you are able to connect to a mass audience, that means you have drawn much attention to the public. However, if you have connected well with your targetted audience or potential customers, that is the key to success.
Numerous sectors are booming in various fields of businesses in India including manufacturing, industry, services, auto, and many others. The reason is simple that India is an export economy. Every sector requires transportation services. If you can identify the weak areas and focus more on robust solutions, it is will smoothly establish your entire business journey. Furthermore, it will help you establish a standard customer base.
Once the customer base is all set, apart from providing robust solutions following your competitors, infrastructure investment also needs to be focused upon.
Now you are all set to go. You have established the standard customer base and insured yourself against all kinds of risks that were involved in this business.
All you just need is to do proper marketing and advertise your company well to make it extensively recognized and draw out the attention of the target audience. Follow the appropriate ways to market your products such as building the website and app for your business, give ads in local newspapers, social media platforms, pamphlets, banners, etc, to enjoy the fruitful results.
You can also join organizations and associations to boost your network with the companies operating in the area. Also, you can use vehicles surface to apply your business name, contact details, and logo to draw the attention of the people towards your company’s name.
Types of Transport Business in India
There are 4 types of transport business in India:
- Air Transport Service
- Courier and Freight Transport Services
- Warehousing Services
- Third-party services are also known as Third-party logistics (3PL)
- Transportation business Ideas
As per a survey conducted last year in 2019, transportation services are estimated at 14% of the GDP as the total value goods share. Numerous profitable business ideas can make you earn handsomely in transportation business which is listed below-
How To Start Transport Business In India
1) Taxi Service
Taxi service is considered to be one of the most lucrative businesses not only in India but in many Asian countries, due to the increase in population as well as businesses. Many people prefer using taxis instead of their own vehicle as it is considered to be more convenient and cheaper especially app-based taxi services. You can start up the taxi service in 2 ways-
a) App-based Taxi Service: App-based taxi services have a broad scope in India as many customers prefer booking their cabs through an app hassle-free from their current location, be it home, office, friends place, etc. We are sure that you must have heard the names of app-based taxi service providers which are renowned in India such as Ola, and Uber. These taxi services are usually for inter-city travel and are affordable as compared to private taxis.
You can start with the app-based taxi service by attaching your own car with these big giants like Ola and Uber, and start earning huge monthly profits. You can attach as many cars as you want and expand the business and income this way. The best part is you will get drivers for running app-based cabs very easily as even the drivers enjoy a big share of profit.
b) Private Taxi Service: These are the taxi’s available at the airport, railway stations, or commonly at the public places. You cannot book these taxis online. There is a counter located at these public places from where you need to book these taxies. These are inter-state, inter-city, and intra-city travel taxis which are comparatively expensive than app-based taxis. Some of the examples are MeruCabs and EasyCabs.
Opening this transport service requires much more documentation, legal formalities, and investment as compared to the app-based taxi services. Moreover, these big brands will not let you share extensive profits as compared to app-based taxi services.
Due to the expanding digital networks between consumers and entrepreneurs, the taxi business is a leading business from which you can earn impeccable profits.
2) Car Rentals
Car rentals business has become very popular especially at tourist spots and in small towns where many people do not have their own vehicle. Nevertheless, the time is changing and the car rental business has gained much recognition in metropolitan cities as well. Although, the cars that are available for rent in these big cities are luxury segment cars that are available for a day, week or month.
Moreover, there are outstation car rentals that people take on a trip. The charges of these cars are very high as it includes the driver cost as well.
Before opting for the car rental business the first thing to consider is the place at which you are setting his business up. The other important aspect is that whether that place has potential customers or not. Once you have gauged all the crucial factors, you are all set to open yours on the agency. Always try to buy a different variety of cars so that people would have options to which one they would want to go for.
3) Ambulance Service
a) Road Ambulance: This transport business has high capital investment but it is capable of generating immense profits. It is a basic need for all medical emergency cases where patents need to be moved from one place to another. The cost of Ambulance services is quite high and can be a good business option. The most crucial element is that the ambulance should be fully equipped with all the pre-requisites for all the patients.
b) Air Ambulance: Another option that you can opt for is to open up an Air Ambulance firm. Air ambulance is the facility that is availed by the patients who have to be transported from one city/state/country to another in an airplane, helicopter, etc, along with their medical equipment. Undoubtedly, the investment is very high but the returns are huge as well. You would require to be inducted with legitimate documentation and a valid license for the pilot.
4) Livestock Transportation
You can enter into this transportation business with pretty much experience as livestock is more vulnerable than other kinds of goods. Many big manufacturing companies consider livestock as their primary component. Certain industries that produce broiled chicken, mutton, beef, etc demand this specialized unit of transport services that can be tapped into by new businessmen in the transport business.
The initial investment involved in this business is minimal and there is a wide scope of making ample profits. If your staff is skilled and can manage to transport the cattle, chicken, or goats from one place to another, you can consider emerging this business.
5) Packers and Movers
This business has gained the utmost recognition in the past few years especially in big cities like Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, etc. Many people shift and change their residencies as well as offices. This arises the need for packaging of office and household goods from one place to another.
They have a team that is specialized in bubble wrap packaging and ensures that no item is damaged and keep them scratch proof while being transferred. The delivery time is very fast. Packers and movers team will keep all your goods at the place you are shifted to and unpack them to ensure that all your goods are in the same condition.
You can make your team who are specialized in packaging. Moreover, the investment cost is not that high as you just need to buy good quality wrapping material, hire staff, and a suitable vehicle to transport the goods.
6) Bicycle Rent
The best part about this business is that it involves the minimum risk as to the maintenance cost plus the investment part is very very low as compared to all the other businesses. Many fitness freaks go for the bicycle ride every day and do not bother to purchase it, rather take it on the rent. This has made many businessmen come up with this business plan.
Bicycles are demanded not only by the fitness freaks but also by environmental lovers. As people are becoming more aware of ecological sustainability, the demands of bicycles and other transport modes that cause less pollution have been increasing in order to live a healthy lifestyle.
You just need to purchase wide-ranging bicycles and start promoting your agency at effective platforms like social media (Whatsapp, Facebook, Instagram), newspaper pamphlets, banners, posters, etc.
7) Specialty Transportation
This transport service is devised for meeting specific industry’s needs like transportation of large mechanical components (windmills, shipment, airplane parts, etc) and huge industrial machines. The other types of services are also included such as transportation of perishable frozen items, human organs, modular houses, etc.
Although the cost of investment is high, you can reap great profits out of this business.
8) Bus Rental Service
This business demands a substantial investment as you would need to buy several buses. Rent those buses for a tour package to increase the overall profitability for your new firm that you have established.
You can also start a passenger bus service for inter-city or inter-state as people travel from and within the cities pretty much these days. This has increased the demand of public transport and hence you can opt for this passenger bus service transportation business.
You can choose any options, among the above two types of bus transport business. You just need to hire a skilled bus driver and register the vehicle from the RTO office. The investment is quite high but the profits are equally good.
9) Truck Transportation Service
As you all might be aware of India’s current population and it is entitled as the world’s second most populated country after China. Due to this, many entrepreneurs who have sufficient funds have dived into this business. Although this business involves high risk, getting your hands on with this business is totally worth it as it can prove out to be a billion-dollar business.
You need to look over a few crucial aspects that include appointing a proficient truck driver, appropriate license, and keeping all the valid inter-state documents.
10) Shipping and Small Boat services
You require to invest ample amount into this business as you already know shipping is not a poor man’s job. You won’t regret investing a huge amount as profits are equally high. An array of goods is transported from one place to another via cruise/ships. You can own that cruise and charge a hefty amount for the transportation of those goods.
You can also invest in small boat businesses through which many people travel through boats mostly in flood-affected areas. This business can give you good returns if it is used at the right place at the right time.
11) E-rickshaw service
E-rickshaw is being used by many people in India. The best part about E-rickshaw is that it does not emit smoke and the driver does not need to apply his force to run it as it is electronic. These rickshaws are very cheap and are the best mode of transportation for very short distances.
You need not invest a heavy amount into this business as you just need to buy some E-rickshaws. Of course, you will need to hire the driver as well, which you will get easily. You can expand this business with time buy buying more rickshaws, and hence, multiply your income.
Also Read: How to start a Tea Shop Business in India
12) Courier Service
The online shopping has become a trend these days. Certain e-commerce giants such as Amazon and Flipkart require regular courier services. With the increase in online shopping, courier service demands have boosted up rapidly. This has led to the emergence of many new courier services startups to come into existence.
You need not invest a big amount to start this business. All you need is the direct contact with the big brands, and appoint the executives who will provide door-to-door delivery. The profit margins are not very high but if you are able to generate regular and multiple orders, you can earn well.
Several courier transport companies in India that are well-known for their excellent services provided to the Indian customers are listed below-
- Blue Dart Express established in 1994
- Indian Postal Services established in 1969
- DHL Express India Private Limited, since 1969
- FedEx India established in 1973
- DTDC Courier and Cargo Limited established in 1990
- First Flight Courier Limited established in 1990
- TNT Express established in 1974
You can also take a franchise from any of the above highly reputed courier companies. This is one of the safest options one could opt for as instead of starting your own courier service, purchase a renowned franchise of a courier service company. After understanding the market, move ahead with their plans.
How can you get into the good books of suppliers?
It is not that easy to get onto the supplier’s list as it requires you to perform diligent work and creating a robust networking connection in the whole sector. However, it also depends on some other factors that are listed below-
- Sub-contracting- It is one of the best ways for low-scale business operators to secure contracts. Sub-contracting is a situation when the transporter does not contract with the principal but the third party. The subcontractor then subcontracts with a recognized transport company that cannot carry out the contract as it is having the contract with the principal.
- Piggybacking- It might happen even for renowned transport companies to not able to meet their commitments mentioned in the contract due to any unforeseen condition. Usually, many establish transport companies sub-contract the delivery in case of overflow. To keep up your name in the reliable supplier’s list, never forget this option
- Mind-boggling service- As you know, there are bountiful competitors in the market who are providing superlative services to the customers. You might need to provide an incentive to an organization in order to exercise your services. Fundamentally, you need to scrutinize everything about your competitors and offer something they do not. For instance- keeping the price lower than your competitors, faster turn around times, and offering exceptional service.
Summing it up
As you have got to know that many transport businesses involve high investment. Hence you should always ensure to have sufficient financial backing at least for the first year of rocky times.
We can conclude that preparing a detailed transport business plan is a must to ensure persistent growth and prosperity for your business with a keen focus on improving the quality of your service, timely delivery of goods, and ensuring safety.
We hope that we have succeeded to inform you about the whole process of setting up and carry out all the tasks related to the transportation business in India. You can let us know which transport business have you opted for and why, in the comments section below.