Uber has been surrounded by controversies and criticism due to prolonged strikes and ban on company’s UberPool services. The ban was issued in Delhi and Bengaluru, both of them being prominent markets for Uber. To continue similar services in India, the ride-hailing company is now in talks with Government to ease regulations and amend the Motor Vehicles Act, 1988.
Identical to its services offered in U.S, the company now seeks to launch ride sharing by deploying private cars in India. In the states, anyone owning a private four-wheel vehicle can become a driver for Uber under its so-called peer-to-peer (P2P) business model. Not only does it increase employment opportunities but also accounts for the majority of the revenues from the company’s home market.
With the game-changing proposal, Uber will solve some of the traffic, pollution and congestion issues endemic in Indian cities. It will also charge against its arch-rival Ola, who recently secured fresh capital to the tunes of Rs. 350 million in a down round from existing investor SoftBank.
Detailing the company’s plans to LiveMint, Uber India president Amit Jain said,
A big push from a policy perspective is how we make private ride-sharing legal. Commercial licence plate cars are a very small percentage of the overall number of cars on the roads. How do you get more people less cars and more people in private car ride sharing and reduce the number of cars on the roads. That is the next push for us and we are fortunate to have a product that allows us to help with that.
Uber piloted P2P service in Punjab last year but was unsuccessful in rolling out the service pan-India due to regulatory issues. The company believes that the launch of private cars will increase the low popularity of sharing services in the country. It will not only provide a cushion against ride-sharing concerns but will accelerate employment growth as well.
According to RedSeer Management Consulting firm, UberPool services in key markets like Delhi, Mumbai and Bengaluru contribute for 60% of all rides in India. This move also suggests company’s plan to reduce protests and strikes by professional drivers and fleet owners over dropping incentives. Both Ola and Uber have spent massive amounts on incentives to attract drivers to their platforms, however, in order to cut costs and lower ballooning losses; the incentives have now been lowered.
Amit Jain himself agreed that incentives have dropped but defended the platform by calling it ‘the most attractive platform’ for drivers. He further added that the firm is working to boost driver earnings by raising fares, improving the quality of its UberPool service and by increasing the number of daily rides by drivers. Reasoning out a clear-cut explanation for fall in incentives, Amit said,
Incentives might have come down, but what a driver partner takes home is organic money plus incentives. When we go into a market, the reason we offer incentives is because the rider will not take a ride if there is no driver partner available.
For a driver partner to be available when the demand is not there or just picking up, he or she has to make sustainable earnings then. You have to have an initial set of supply. Over time, when demand catches up, the organic earnings become sustainable for a driver partner.