<div>Why is taxi-hailing app Uber doubling down in India and China? Last month, the San Francisco-based company closed $1 billion in fresh funding, raising its valuation to $50 billion-plus. The fund-raising coincided with its announcement that it was going to invest $1 billion in India over the next nine months. Only the previous month, Uber had bared its intentions to pump in $1 billion this year into China to play catch up with Didi Kuaidi, which has reportedly outgunned the US challenger in that huge market.<br /><br />Looks like the cab aggregator is pulling all stops to come up trumps in the world’s two most populous markets. And the humbling in China may have added to its resolve to be steadfast in India, where like in China, it has a formidable competitor in Ola, owned by ANI Technologies. Though late to the game, India is witnessing exponential growth in the taxi aggregation market with local players calling the shots. Ola leads the market, along with Savaari, Bookmycab, ZoomCar India, Mega Cabs, and Easy Cabs. Some of them, though, have varying business models. According to a note by Morgan Stanley analysts, Indian taxi aggregation market would be worth $5 bn by 2020.<br /><br />If Uber can lay claim to its deep pockets, Ola won’t be a pushover. It is backed by SoftBank (Japan), Tiger Global (US), and Yuri Milner’s DST Global. While Uber has raised $10 billion so far, Ola has raised around $700 mn. But Uber operates in multiple markets around the world, whereas homegrown Ola is bound to just India. Analysts are of the view that Ola would be able to rustle up the funds required to combat the $1-bn war chest of Uber.<br /><br />India success a priority<br /><br />Uber CEO Travis Kalanick had stated in June while appointing Amit Jain as the new India president that success in India was a priority. At that time, Allen Penn, who heads the company’s Asian operations, was quoted as saying that Uber was growing 40 per cent every month in India. But by every yardstick, Uber has to play catchup a lot in India. Ola operates in about 100 cities in India, against an estimated 18 by Uber. The American company employs about 50,000 drivers against Ola’s estimated 150,000. In daily rides too, Ola claims to do 750,000 rides versus Uber’s 200,000. Uber recently raised the stakes when it said it is targeting one million daily rides by March 2016. There too, it can expect considerable competition from Ola.<br /><br />When contacted by Deccan Herald, Uber South Asia and India Communications head Karun Arya said with the new investment and the strong growth rate, the company expects to hit over one million trips per day in the next six to nine months. He said Uber will support over 200,000 jobs in India by 2016. While announcing a $50-mn investment in Telangana recently, Uber had committed to create 50,000 jobs for women in India (by 2020) in partnership with iCare.<br /><br />Ola’s director of marketing communications Anand Subramanian told Deccan Herald that the company now makes 750,000-plus rides a day and has 80 per cent of market share. According to him, Ola is adding 1,500 vehicles every day. Subramanian claimed that the company wants to create high quality supply in the market. “For this, we have decided to intensify our training programme. We tied up with the Defence Ministry so that retired army personnel can become entrepreneurs by joining Ola as cab owners,” he said. Subramanian said the company is focusing on intra city traffic. For premium class travellers, it offers the Ola Prime service.<br /><br />Arya highlighted Uber’s technology credentials. “Uber is a technology company that is revolutionising the way people connect with their cities. With Uber, riders typically get a car in under 10 minutes and drivers have less dead kilometers and earn more money. We’re bringing change and competition to the market that benefits riders, drivers and cities,” he said.<br /><br />According to Greyhound Research Chief Analyst & CEO Sanchit Vir Gogia, Uber has made a place for itself in the Indian market despite the setbacks it had to face. “Its recent announcement on providing free rides in sports cars and Uber Puppies comes as a move to lure customers to try Uber as compared with its competitors. Uber tied up with Indian mobile payment platform PayU and digital wallet Paytm, post RBI’s concerns over violations of India’s forex laws. It is also testing its cash-based model in Hyderabad to tap into the segment where Ola and Meru pick up the maximum market share,” he said.<br /><br />Regulatory hurdles galore<br /><br />Recently the Delhi High Court made it clear that all diesel taxis are barred from making point-to-point metered rides in the capital, and as a result, both Uber and Ola are likely to face fresh restrictions there. Uber had previously suffered a temporary ban in Delhi last year, after allegations of sexual assault by a driver on a passenger. Recently, after a horror story involving the assault on a 19-year-old Airbnb customer by his host in Madrid came out, critics started once again pointing fingers at proponents of the so-called sharing economy like Uber and Airbnb, saying what they really do is share risk.<br /><br />But Gogia, for one, thinks regulatory concerns have receded. According to him, what Uber faced in India can be categorised as teething problems that any new entrant would face. “Over time the Indian government and Uber will have to meet midway to work on legal and regulatory issues. With the recent announcements by Uber, it only goes to show that it is here to stay,” he said. Then there is the question of taxation. Since taxi service operators are not in the negative list for service tax, they are liable to taxation. But it kicks in only on revenues above Rs 10 lakh, and individual drivers of the aggregators may not meet that threshold. There were, however, reports that Uber had agreed to pay service tax on the combined turnover of its drivers. More clarity is awaited on this.<br /><br />Cash-burn is another concern. Even though Uber tops the list of 104 venture-backed startups valued at $1 billion or more according to Dow Jones VentureSource, the company in its fourth year in business (2013) made a loss of $56 million on $104 million in revenues, according to American blog Gawker. The blog said the losses increased to $160 million in the first half of 2014, on $102 million in revenues. Even if true, many would see such losses as the inevitable price to be paid to grow market share exponentially.<br /><br />Narendar Pani, an expert in urban development and professor at the National Institute of Advanced Studies, described taxi aggregation as a small business in the high volume arena of urban transport. “It is good to have taxi aggregators who can capitalise on the growing urban transport. If there is competition, it will help consumers get the cheapest facility to commute in the city. But there should not be any monopolistic tendencies among players,” he said. Pani added that there should be thorough regulatory mechanism from the government side so that monopolistic tendencies are nipped in the bud.<br /><br />With all the ingredients necessary for a showdown, there is no doubt that action-packed days are ahead for India’s cab users. And if proper regulatory and safety measures are in place, they can look forward to some great wallet-friendly discount deals.<br /><br />Uber in India<br /><br />Said in July it plans to invest $1 bn in India over nine months<br />Targets 1 million daily rides by March 2016<br />Uber currently operates in an estimated 18 cities in India<br />Estimates say Uber offers around 200,000 daily rides in India<br />Uber employs around 50,000 drivers<br />Uber has raised close to $10 bn so far<br />It is valued at about $50 bn<br /><br />Ola in India<br /><br />Ola is reportedly planning to raise another $500 mn<br />Ola operates in more than 100 Indian cities<br />Estimates say Ola offers around 500,000 daily rides<br />Ola has about 150,000 drivers today<br />Targets 1 m drivers by 2017<br />Ola last raised $400 m in April 2015; in all around $700 mn<br />The new round of funding might value it at $4-bn plus<br />Key people: Founder Bhavish Aggarwal<br />Key people: Travis Kalanick (CEO); Amit Jain (president, India)<br /><br /></div>
<div>Why is taxi-hailing app Uber doubling down in India and China? Last month, the San Francisco-based company closed $1 billion in fresh funding, raising its valuation to $50 billion-plus. The fund-raising coincided with its announcement that it was going to invest $1 billion in India over the next nine months. Only the previous month, Uber had bared its intentions to pump in $1 billion this year into China to play catch up with Didi Kuaidi, which has reportedly outgunned the US challenger in that huge market.<br /><br />Looks like the cab aggregator is pulling all stops to come up trumps in the world’s two most populous markets. And the humbling in China may have added to its resolve to be steadfast in India, where like in China, it has a formidable competitor in Ola, owned by ANI Technologies. Though late to the game, India is witnessing exponential growth in the taxi aggregation market with local players calling the shots. Ola leads the market, along with Savaari, Bookmycab, ZoomCar India, Mega Cabs, and Easy Cabs. Some of them, though, have varying business models. According to a note by Morgan Stanley analysts, Indian taxi aggregation market would be worth $5 bn by 2020.<br /><br />If Uber can lay claim to its deep pockets, Ola won’t be a pushover. It is backed by SoftBank (Japan), Tiger Global (US), and Yuri Milner’s DST Global. While Uber has raised $10 billion so far, Ola has raised around $700 mn. But Uber operates in multiple markets around the world, whereas homegrown Ola is bound to just India. Analysts are of the view that Ola would be able to rustle up the funds required to combat the $1-bn war chest of Uber.<br /><br />India success a priority<br /><br />Uber CEO Travis Kalanick had stated in June while appointing Amit Jain as the new India president that success in India was a priority. At that time, Allen Penn, who heads the company’s Asian operations, was quoted as saying that Uber was growing 40 per cent every month in India. But by every yardstick, Uber has to play catchup a lot in India. Ola operates in about 100 cities in India, against an estimated 18 by Uber. The American company employs about 50,000 drivers against Ola’s estimated 150,000. In daily rides too, Ola claims to do 750,000 rides versus Uber’s 200,000. Uber recently raised the stakes when it said it is targeting one million daily rides by March 2016. There too, it can expect considerable competition from Ola.<br /><br />When contacted by Deccan Herald, Uber South Asia and India Communications head Karun Arya said with the new investment and the strong growth rate, the company expects to hit over one million trips per day in the next six to nine months. He said Uber will support over 200,000 jobs in India by 2016. While announcing a $50-mn investment in Telangana recently, Uber had committed to create 50,000 jobs for women in India (by 2020) in partnership with iCare.<br /><br />Ola’s director of marketing communications Anand Subramanian told Deccan Herald that the company now makes 750,000-plus rides a day and has 80 per cent of market share. According to him, Ola is adding 1,500 vehicles every day. Subramanian claimed that the company wants to create high quality supply in the market. “For this, we have decided to intensify our training programme. We tied up with the Defence Ministry so that retired army personnel can become entrepreneurs by joining Ola as cab owners,” he said. Subramanian said the company is focusing on intra city traffic. For premium class travellers, it offers the Ola Prime service.<br /><br />Arya highlighted Uber’s technology credentials. “Uber is a technology company that is revolutionising the way people connect with their cities. With Uber, riders typically get a car in under 10 minutes and drivers have less dead kilometers and earn more money. We’re bringing change and competition to the market that benefits riders, drivers and cities,” he said.<br /><br />According to Greyhound Research Chief Analyst & CEO Sanchit Vir Gogia, Uber has made a place for itself in the Indian market despite the setbacks it had to face. “Its recent announcement on providing free rides in sports cars and Uber Puppies comes as a move to lure customers to try Uber as compared with its competitors. Uber tied up with Indian mobile payment platform PayU and digital wallet Paytm, post RBI’s concerns over violations of India’s forex laws. It is also testing its cash-based model in Hyderabad to tap into the segment where Ola and Meru pick up the maximum market share,” he said.<br /><br />Regulatory hurdles galore<br /><br />Recently the Delhi High Court made it clear that all diesel taxis are barred from making point-to-point metered rides in the capital, and as a result, both Uber and Ola are likely to face fresh restrictions there. Uber had previously suffered a temporary ban in Delhi last year, after allegations of sexual assault by a driver on a passenger. Recently, after a horror story involving the assault on a 19-year-old Airbnb customer by his host in Madrid came out, critics started once again pointing fingers at proponents of the so-called sharing economy like Uber and Airbnb, saying what they really do is share risk.<br /><br />But Gogia, for one, thinks regulatory concerns have receded. According to him, what Uber faced in India can be categorised as teething problems that any new entrant would face. “Over time the Indian government and Uber will have to meet midway to work on legal and regulatory issues. With the recent announcements by Uber, it only goes to show that it is here to stay,” he said. Then there is the question of taxation. Since taxi service operators are not in the negative list for service tax, they are liable to taxation. But it kicks in only on revenues above Rs 10 lakh, and individual drivers of the aggregators may not meet that threshold. There were, however, reports that Uber had agreed to pay service tax on the combined turnover of its drivers. More clarity is awaited on this.<br /><br />Cash-burn is another concern. Even though Uber tops the list of 104 venture-backed startups valued at $1 billion or more according to Dow Jones VentureSource, the company in its fourth year in business (2013) made a loss of $56 million on $104 million in revenues, according to American blog Gawker. The blog said the losses increased to $160 million in the first half of 2014, on $102 million in revenues. Even if true, many would see such losses as the inevitable price to be paid to grow market share exponentially.<br /><br />Narendar Pani, an expert in urban development and professor at the National Institute of Advanced Studies, described taxi aggregation as a small business in the high volume arena of urban transport. “It is good to have taxi aggregators who can capitalise on the growing urban transport. If there is competition, it will help consumers get the cheapest facility to commute in the city. But there should not be any monopolistic tendencies among players,” he said. Pani added that there should be thorough regulatory mechanism from the government side so that monopolistic tendencies are nipped in the bud.<br /><br />With all the ingredients necessary for a showdown, there is no doubt that action-packed days are ahead for India’s cab users. And if proper regulatory and safety measures are in place, they can look forward to some great wallet-friendly discount deals.<br /><br />Uber in India<br /><br />Said in July it plans to invest $1 bn in India over nine months<br />Targets 1 million daily rides by March 2016<br />Uber currently operates in an estimated 18 cities in India<br />Estimates say Uber offers around 200,000 daily rides in India<br />Uber employs around 50,000 drivers<br />Uber has raised close to $10 bn so far<br />It is valued at about $50 bn<br /><br />Ola in India<br /><br />Ola is reportedly planning to raise another $500 mn<br />Ola operates in more than 100 Indian cities<br />Estimates say Ola offers around 500,000 daily rides<br />Ola has about 150,000 drivers today<br />Targets 1 m drivers by 2017<br />Ola last raised $400 m in April 2015; in all around $700 mn<br />The new round of funding might value it at $4-bn plus<br />Key people: Founder Bhavish Aggarwal<br />Key people: Travis Kalanick (CEO); Amit Jain (president, India)<br /><br /></div>
