TAXI-sharing companies including Uber and Ola (the latter, a domestic giant that is posing stiff challenge to the global major) have raised their market share in urban India significantly in recent years.

But the two firms have started feeling the pressure both from consumers and those driving the vehicles. Last week saw a major crisis when drivers of both Uber and Ola went on a flash strike in cities including Mumbai, Delhi and Bangalore.

The worst hit were the thousands of customers of the two companies in Mumbai, as the drivers — under the influence of ambitious trade union leaders of regional parties such as the Maharashtra Navnirman Sena (MNS) — arbitrarily decided to go on a strike.

There are about 50,000 Uber and Ola cabs in use in Mumbai, and thousands more elsewhere in urban India. According to estimates, there are 1.5 million drivers for the two companies, including many who quit regular, white-collar (and of course, blue-collar) jobs and took to driving.

Both Uber and Ola roped in thousands of drivers in the beginning about five years ago, when taxi-sharing sprouted in the country. Drivers of the two services used to brag about how they could earn up to — or even more than — Rs100,000 a month.

The two companies faced a lot of challenges from the existing taxi operators in the major cities and also from government officials about the relatively higher fares that their services demanded.

Commuters in cities like Mumbai, Delhi and Bangalore were happily willing to pay more fares, if they were assured of good service in modern cars. Mass transport services including suburban railway services and metro services still face problems of over-crowding in these cities and regular cabbies and auto-rickshaw service providers are often arrogant, declining to take passengers to their destinations.

Last week saw a major crisis when drivers of both Uber and Ola went on a flash strike in cities under the influence of ambitious trade union leaders of regional parties

Indeed, as has been happening in the US, Europe and other advanced countries, many in Indian cities stopped driving to work, preferring to travel by Uber or Ola. Instead of wasting frustrating hours in traffic snarls, they now spend time on their mobiles, either speaking to colleagues and friends, or exchanging notes and mail in the air-conditioned comfort of these cars.

The services are available on their mobile apps and they can monitor them throughout the journey. Fares are also paid mostly through transfers on the app and there are not many cash transactions. Importantly, there are shared services, where two or three other passengers can be accommodated, reducing the cost of travel.

While consumers have gained a lot, the drivers are feeling the pinch. Earlier, the taxi firms would let drivers retain much of their earnings, but today nearly a quarter of their income is retained by Uber and Ola.

Drivers in cities like Mumbai complain that their earnings have dropped to less than Rs25,000 a month. Many of the drivers have bought new cars costing between Rs500,000 and Rs700,000 and their monthly outgo on repayment of loans and interest is huge.

INDIA, however, continues to be a major market for Uber and also for Ola, which is an Indian company, but with a significant presence of international investors.

Ola, which now operates in 110 Indian cities — and provides regular taxi services and even auto-rickshaw and electric vehicle services — has been attracting huge foreign investments.

Last September, Chinese internet major Tencent invested $400m in the company, raising its market valuation to $4 billion.

A few months later, Japanese major SoftBank injected $1.1bn into the company.

The Indian company is also planning an aggressive overseas expansion including in Sri Lanka and Bangladesh. Recently, it launched services in Australia especially Perth and Sydney. Ola has signed up about 7,000 drivers so far (as against more than 80,000 by Uber).

In Australia, the company takes a mere 7.5 per cent of the driver’s earnings, though it plans to double this shortly. Uber, on the other hand, collects almost 25pc of a driver’s income.

Within India, both Uber and Ola have been able to rope in existing taxi and auto-rickshaw drivers and in some cases even bike riders. Uber, for instance, launched UberMOTO, a two-wheeler service where bikers pick up passengers, offering them cheaper services.

The two companies offer these services in many states where it is legal to operate a two-wheeler as a commercial taxi service. Bike taxis are becoming popular in Indian cities mainly because of the sharply lower fares and the speed with which customers are taken on busy roads.

Not surprisingly, despite the stiff competition and the resistance from existing operators, Uber plans to expand aggressively in India. Dara Khosrowshahi, the Uber CEO, who was in India recently, said that the country was a ‘core’ market for the company.

“How we perform as a company 5-10 years from now is very much going to be determined by our success in India,” he declared. Khosrowshahi says he wants to increase the number of engineers in India by three to four times this year alone, as the company needs their talent.

“We have a big business in India, but it is essentially a taxi-hailing company, it is not about car sharing,” said the Uber chief.

“The next step for us to get our business to where we want it to be in India is to help move the regulations forward, so that we go from taxi-hailing to true car sharing. That will allow us to take cars off the road, reduce pollution and it will make much stronger use of assets that we have here.”

Of course, Uber is expanding rapidly in India, offering a host of services including Uber Eats, its food delivery service.

Though the leading taxi-sharing companies continue to face stiff opposition from existing taxi operators and unions affiliated to ambitious political outfits, they appear to be driving on the fast lane, luring millions of aspiring middle-class Indians, and urging them not to invest in their own cars.

Published in Dawn, The Business and Finance Weekly, March 26th, 2018