Uber and OlaCabs battle it out for Mumbai’s ride-hailing market


From Flickr.

by Anam Alpenia

Uber Mumbai’s office is about as far removed from its 423,000 square-foot San Francisco headquarters as possible. Tucked into a small corner of a glass-fronted Standard Chartered block in Bandra Kurla Complex, an aspirant industrial hub on the banks of the Mithi River, a small team works on the company’s local goals in relative anonymity.

Of course, their paymasters are anything but – hero of the sharing economy, villain of transport regulators and taxi drivers worldwide, and now worth an estimated $50 billion. And despite Uber Mumbai’s humble surroundings, the company’s plans for India include some $1 billion of investment, which it claims will help it reach one million rides a day by next year.

That would put Uber ahead of OlaCabs, its nearest and strongest competitor, in a city that is cradling the world’s most intriguing ride-hailing battle. Right now the latter holds 80% of India’s market, and completes over 750,000 journeys per day. But if recent history has taught anything, it’s that Uber can rarely be underestimated.

Perhaps that’s why Ola, run by ANI Technologies, won a $400 million funding round this spring, led by Russian billionaire Yuri Milner, GIC, Falcon Edge Capital and other existing investors. Having recently moved from Mumbai to Bangalore, the company says it will spend the cash on expanding not only in India’s major cities, but out into towns and villages that have been forsaken by the technological revolution in a new India.

“The focus is on building more markets,” says Anand Subramanian, Ola’s director of marketing communications. “We’re already present in around 100 cities now, and we’re looking to make that 200 within a year.”

Among Ola’s investors is SoftBank, the Japanese giant which has helped partially freeze Uber out of its other big prize, China. There, the country’s most popular ridesharing app, Didi Kuaidi, claims to process 6 million journeys per day, and has itself invested in Uber’s biggest U.S. competitor Lyft. The efforts to curb Uber’s incredible growth are becoming more coordinated. That doesn’t mean, however, that its India efforts will stop.

Shaliesh Sawlani has been Uber Mumbai’s GM since it set up shop 18 months ago. His own journey has taken him from India to Barcelona, Dubai and back again, working across events and e-commerce. Even in the time he was away, India’s attitudes to technology shifted wildly. And while it is Bangalore, “India’s startup hub”, which is laying the country’s digital path, it is Mumbai which presents India’s biggest prize.

Sawlani cites India’s recent economic successes as the major factor driving ride-hailing apps’ popularity: “In Mumbai it has always been aspirational to own a car, to drive my own car. As so despite everything that’s out there – buses are timely, efficient; trains are many and there are plenty of taxis and rickshaws – people have always wanted their own car.

“That’s another space that we are into,” adds Sawlani, whose charges have dropped the average waiting time for a car from 25 to seven minutes. “And frankly, that’s the reason why we’re saying we’re growing the market, why we’re growing our share of the transportation market. If you look at the existing forms of commute, we’re complementing that.

“This is a new mindset. It’s the new Mumbai, the new India. And faster urbanization is affecting that. If you drive into one of the suburbs on an evening you’ll see what a mess it is. Increasingly people are going abroad, coming back and realizing that you don’t need to own a car.”

Mumbai received its first fleet of black-and-yellow Fiats in 1911, 36 years before independence from Britain. Today the Italian marque’s old, boxy models still rub shoulders with smaller, sportier Hyundais and Toyotas. But recently, however, the number of taxis has dropped sharply – from 45,000 in 2004 to just 35,000 last year. It is more common to be waved off by a driver reluctant to take short trips in Mumbai. Demand is outstripping supply.

Prohibitive licensing laws mean that migrants to the city cannot get a taxi driving badge unless he (and it is almost always a he; more on that later) can prove a 15-year-long Mumbai residence. That, and other bureaucracy, has helped riddle the city’s taxis with corruption. Normally, each cab is rented out by its owner, illegally, to two drivers per day: one from 6am to 6pm; one from 6pm to 6am.

That has amplified calls for greater security in the industry, in a city . But it is Uber which has come under intense scrutiny in recent months, after its drivers faced sexual assault allegations from incidents near Delhi. In response Uber introduced an in-app panic button. In June state transport officials in the capital rejected applications from Uber, OlaCabs and TaxiForSure, another ride-hailing app, to operate.

In July the issue took a surprising twist, when Delhi’s High Court reversed the Uber decision, but not Ola’s, giving the former a huge boost in a metropolis whose greater population tops 16 million. Mumbai, however, has an urban population over 18 million, a GDP of $209 billion and 25% of India’s entire industrial output. Despite the emergence of Delhi, Bangalore and Hyderabad, Mumbai remains, true to its nickname, the ‘Maximum City’.

True to form, the city, a spleen-shaped spit off the coast of Maharashtra state, has its own, unique transport factors. Its main commercial hubs are all located in the south, while most people live in the north – and there are few circular routes – meaning that each morning the vast majority moves from north to south, then back again each evening. This has made developing a smooth, reliable system difficult – but not impossible.

Mumbai also has a huge legacy competitor in Meru Cabs, a dial-a-cab firm which has over 8m consumers in the country. It has recently tried to convert its business from an “asset-heavy, call centre-dependent, to a tech business,” says CEO Siddhartha Pahwa. “We are the only company in India that is actually making a profit,” he adds, while claiming that the company has its response time down to 5-7 minutes.

Whether Meru can adapt in time for Mumbaikars to become adept at the digital sharing economy is up for debate. Mumbai, like many other parts of India, is still far behind the west in terms of payments. As reported before at Red Herring, a huge swathe of Indians are unbanked. Digital payment systems favored by Uber and co on other continents, have had to bend. Uber, Ola and Meru all offer cash payments. The former two have developed their own digital wallets too. Ola processes 50% of all payments that way, according to Subramanian.

You won’t find any women driving black-and-yellow taxis in Mumbai. Brands such as SheCabs, Priyadarshini Taxi Service and Viira Cabs have appeared in the past few years, vowing to employ female drivers, and allow women to travel across town with women only. But few have kept afloat. And despite moves such as Maharashtra state halving the cost of driving permits for women, there are woefully few women driving on Mumbai’s streets.

The three firms have each moved to offer woman-to-woman services, as the debate about taxi-based sexual violence has heated. Uber, too, has offered martial arts training for female drivers, amid a spate of high-profile sexual cases that have highlighted India’s ‘rape culture’.

But while these moves may offer society some positive notes from the taxi industry, it is likely price, and quality of service, which will determine who comes out on top in Mumbai’s transport war. Pahwa’s cabs cost more than Ola’s or Uber’s – which both offer rides at under 20c per kilometer. But he’s still bullish about the market, and what his new competitors can bring. Meru has grown by 42% year-on-year, the past two years.

“We believe the Indian taxi sector is still at a very nascent stage,” says Pahwa. “The taxi market here is about $15 billion, and out of this only $1 billion is organized, which is hardly 7%. Therefore a multiple number of good-quality players are required to create a category, and we’re very happy to Uber and Ola are spending this kind of money to create a category for us.”

That may be optimistic. But Mumbai is certainly proving fertile ground for a new fight to secure customers, as competitors move to block Uber’s rise to ubiquity. “More dreams are realized and extinguished in Bombay than any other place in India,” wrote author Gregory David Roberts. The next 12 months will be key in deciding which of the city’s dreams survive, when it comes to cabs.