Rideshares no silver bullet for urban India’s mobility woes

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With Uber marking its 10th anniversary of operations in India on 29 August, the occasion presents a compelling juncture to assess whether the ride-sharing behemoth, along with its chief rival Ola, has truly delivered on the promise of solving the myriad challenges confronting India’s urban mobility.

Not so long ago, ride-sharing platforms like Ola and Uber were touted as urban saviors, promising to alleviate some of the most daunting problems plaguing India’s densely populated and rapidly expanding cities. Offering a spectrum of mobility options at different price points—from economical bike rides to budget-friendly three-wheelers, shared cabs, and private taxis—they aimed to provide a salve for the notorious traffic congestion and pollution afflicting major metropolitan areas. At the same time, it was hoped that these platforms would  significantly diminish the reliance on personal vehicles, thus aiding in traffic decongestion and pollution reduction, all while generating employment opportunities for hundreds of thousands of young people otherwise lacking the specialized skills for traditional job markets.

Going by what the ride-share companies are saying, a lot of these objectives appear to have been met. Ola, for instance, says it is used for more than a billion rides every year, offers multiple mobility options in more than 250 cities, and offers a sustainable income to more than 15 lakh “driver partners”. 

Uber, on its 10th anniversary, pointed out that over the past decade, it had completed 300 crore trips and offered a cumulative 50,000 crore in earnings to more than 3 million partner drivers (though its current driver strength is estimated at around 8 lakh across all modes) since it started operations in Bengaluru in 2013.

It also released the findings of a survey it conducted among its users on the occasion, where an overwhelming 90% of respondents said the app had revolutionised the way they travel in India, while a significant 72% said the easy availability of mobility options made possible by the platform had made them “re-evaluate” their purchase of a personal vehicle.

So much so, that in 2019, when the automobile industry in India saw an unprecedented 30% drop in sales, finance minister Nirmala Sitharaman had gone so far as to say that the probable root of the sector’s woes lay in the rise of ride-share companies, as well as the changing mindset of millennials on owning assets like personal vehicles.

Indian millennials, despite the glamorous sounding designation, are not quite like their western counterparts, with a majority in that age cohort belonging to poor and middle class families. In fact many millennials, polled by a popular TV channel after the finance minster’s statement, said they did not have the kind of jobs or earnings which could support the purchase of a personal vehicle and the availability of ride-hailing options had little to do with their not buying a vehicle.

Passenger vehicle sales have actually bounced back after the 2019 slowdown, which dragged into 2020-21 thanks to covid-induced lockdowns. Numbers put out by the Society of Indian Automobile Manufactures show passenger vehicle sales, which had dropped from 32.88 lakh in 2017-18 to a low of 27.11 lakh in 2020-21, bounce back to 38.9 lakh in 2022-23. In fact, a spokesperson of the Federation of Automobile Dealers Associations said that the surge in sales were partly due to increasing complaints of lack of availability and frequent cancellations on ride-hail apps, which was making customers re-evaluate purchasing a personal vehicle!

This continuing investment in personal vehicles as the answer to spotty, unreliable, unsafe and overcrowded public transport options has meant that ride aggregators have not dented the challenge of clogged traffic in Indian cities – if anything, they have added to it. This also means that the challenge of pollution – India has eight of the world’s top ten most polluted cities – remains acute.

And there is the affordability issue. 

Despite India leading innovations such as shared or pooled rides and bike taxis, the fact remains that more than a quarter of urban Indian workers walk to work according to Census data. Other options like bus or train account for a majority of those who use some form of transportation, while cabs account for a tiny fraction.

Clearly, despite their apparent ubiquitousness, ride aggregators have failed to be the hoped-for solution to mobility challenges faced by Indian cities. And with rising fuel costs eating into drivers’ earnings – while pushing up costs for commuters – the problem has worsened.

The Union government amended the Motor Vehicles Act in 2019 to bring ride aggregators under its ambit, and issued model guidelines in 2020. The trouble is, that several states, around 14, had already come out with their own local laws on aggregators, prompted by rising user complaints, clashes with older regime transport operators such as licenced taxis and auto-rickshaws, as well as the loss of revenues to urban civic administrations through reduced taxi and auto licence fees. Even the model guidelines are being hotly contested by the industry, especially the requirement to provide simulator-based training, comprehensive insurance, as well as the cap on surge pricing to 1.5X base fare.

Despite the miles they’ve covered, the journey for ride-hailing services like Uber and Ola seems far from complete. Regulatory issues, fuel costs, and user dissatisfaction are but a few of the roadblocks on the path to becoming the ultimate solution for India’s urban transport woes.


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