Uber is lobbying the government to ease regulations that will allow the company to introduce ride sharing using private cars in India, a move that could become a game changer for Uber and its local rival Ola.
Uber India president Amit Jain said the company’s representatives are in talks with regulators to seek an amendment to the Motor Vehicles Act, 1988, that would allow ride sharing with private cars.
In the US, Uber’s home market, much of the company’s business comes from the so called peer-to-peer (P2P) model, where any person who owns a car can become a driver on Uber’s platform. Mint reported in September that Uber India is banking on the P2P service to increase supply over the long-term.
“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. What we need to do to solve some of the traffic, pollution and congestion issues that are so endemic in Indian cities is 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,” Jain said in an interview.
Uber tried out P2P in Punjab last year, but it hasn’t launched the service nationally because of regulatory issues.
Uber’s attempt to legalise P2P comes at a time when its services have been continually disrupted, particularly in the two key markets of Delhi and Bengaluru, which along with Mumbai account 60% of all rides in India for Uber and OIa, according to RedSeer Management Consulting.
Over the past six months, drivers and fleet owners on these two platforms have complained about a sharp drop in incentives. Thousands of cars affiliated to Ola and Uber went off the roads for more than 10 days in Delhi and Bengaluru, beginning 12 February. After initially spending hundreds of crores of rupees on incentives to attract drivers to their platforms, Uber and Ola have cut spending in order to reduce ballooning losses.
Adding private cars on its platform will help Uber become less susceptible to protests and strikes by professional drivers and fleet owners apart from dramatically increasing the potential market size.
Jain had said last week that the recent strikes by drivers were the work of a “small number of individuals who do not represent the majority of the driver community.”
Jain said that while incentives have dropped, Uber is still the most attractive platform for drivers. He added that the company is also 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.
“There is this mix between organic and incentives. 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,” Jain said.