Mon, Jun 15, 2015 - Page 14 News List

Indian taxi app rise faces slowdown


India’s ultra-competitive app-based taxi-hailing market has quickly become a multibillion-dollar industry, but controversy surrounding safety, rejected licenses and protesting cabbies threatens to slam the brakes on its spectacular rise.

Domestic company Ola Cabs and US-based Uber Technologies Inc are booming, fueled by a rising number of professionals wanting an easy-to-book, clean and air-conditioned cab in India’s rapidly growing and congested cities.

However, it has not been a completely smooth ride, with Indian authorities rejecting Uber and Ola’s applications to operate in New Delhi, even impounding cars, and the firms facing angry protests from traditional taxi drivers.

Ola Cabs has soared from fledgling Internet start-up to the leader of India's smartphone taxi-hiring industry in just five years and is now worth an estimated US$2 billion.

It recently bought up domestic competitor TaxiForSure for a reported US$200 million and is also outperforming web and mobile app-based rival Meru Cabs in a crowded marketplace.

In 2010, two young entrepreneurs in Mumbai — Bhavish Aggarwal and Ankit Bhati — founded Ola and started operating with only a handful of vehicles before increasing the number of cars on its network to 10,000, across ten cities, by last year.

An aggressive recruitment drive over the past 12 months has resulted in its operations rising more than tenfold and Ola now operates 150,000 vehicles in 100 cities stretching the length and breadth of India.

Ola notched 200,000 rides a day in January and predicts it will record over a million a day this month. They have also started to offer auto-rickshaws for hire and are to start delivering groceries too.

It does not own the majority of the cars itself but helps drivers acquire loans which are then repaid in small sums.

Some of those drivers joined hundreds of others working for Ola and Uber at a demonstration in New Delhi on Monday, saying the city government’s crackdown on the industry had forced them off the roads.

The companies were banned in the capital in December last year after an Uber driver was accused of raping a female passenger in a case that sparked uproar.

However, they resumed operations in January despite the government rejecting their applications for a license to operate.

“We are doing an honest job, there is 100 percent transparency here, why are we being treated like criminals?” said Petrick William, 35, whose car was impounded.

Delhi’s Ola and TaxiForSure drivers were given an reprieve last week when the High Court overturned the government’s ban. Uber has now filed a similar petition in the court in the hope of winning a similar ruling.

Subramanian, Ola's spokesman, said his company planned to hire 50,000 female drivers over the next three years to ease safety fears among female passengers.

“It would also create work for those women who otherwise do not get those opportunities,” he added.

Ola already uses an investigative agency to look into candidates' background to ensure their suitability while Uber has also tightened up its security checks following the alleged rape.

While Subramanian is bullish about Ola's future, some analysts are skeptical about its long-term viability.

“From a customer convenience angle, start-ups which deliver services at your doorstep on demand are great, but from an investor angle they do not appear to be that impressive since they do not give returns,” head of Mumbai-based Capital Portfolio Advisors Paras Adenwala told AFP.

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