Published On : Wed, Aug 19th, 2015

Ola vs Uber : Need to tide over Ride!

Ola-and-Uber-India-InfograpLately with the entry of Uber, the mobile app based cab service provider, in Nagpur, the competition has grown much uglier than ever. Uber and Ola, the ride-sharing aggregators that match cabs with passengers through smart phone applications, have become extremely bullish in their bid to outstrip each other.

Ola, the home-grown competitor to the global operator Uber, is spread across 100 cities in India and records 700,000 consumer rides a day. Uber counts 200,000 trips in 18 cities. To maintain the lead, Ola is intent on maximising its capital.

In June, it attracted an investment of $400 million from the Russian billionaire Yuri Milner. Since then there have been reports of more money coming Ola’s way. This has sent Uber into a tizzy, and it recently pumped in $1 billion into the Indian market. More money means more cars plying, and history shows such growth cannot continue without regulation.

But the government is yet to fathom the concept of “aggregation”, which provides an algorithmic advantage that makes app-based taxi services more in the nature of community organisers than contractors. The tech-heavy aspect places them under IT laws, which the companies are happy to comply with.

But this also helps them evade motor transport laws. Can a government put a cap on such operations that organise drivers and facilitate business for them, they ask. That’s where the debate stands in other countries.

But in India the debate is in its infancy. It’s only after December 2014, when an Uber driver in New Delhi was convicted of raping a passenger, that the government sharpened its focus on ride-sharing apps. Consumer security became the focus of the regulation debate, and it remained so until a ban was recently imposed in New Delhi on app-based taxi aggregators. Since a majority of the Uber and Ola vehicles are diesel-run, the government said they posed an environmental threat. Karnataka is now weighing a similar approach, as is Kolkata.

Is suspending them the right solution?

There are about 500,000 taxis attached with Uber and Ola nationwide. Most of them have been bought on high-interest loans, and the companies are adding 200-300 chauffeurs a day.

The Delhi-based ones are brushing aside the ban and continuing to operate. The police are fining them, even impounding some cars. Several hundred drivers who have stopped working are in distress; many have missed their loan repayments or are on the brink of defaulting.

The Central government must intervene and stop allotting new licences to diesel-run taxis while letting the existing ones to operate. It should devise a regulatory framework to make aggregators such as Uber and Ola accountable to consumers, and end predatory pricing, market saturation strategies and similar practices. But let them ride on.
(Source : The Hindu)