Uber, Ola locked in high-stake battle for India market

With the government seeking to bring taxi aggregators players under its ambit, both firms are spending hundreds of millions to win customers

India is gearing up for the battle between Uber and Ola with the government seeking to amend the Central Motor Vehicle Act to bring such players under its ambit. The government is following the example of China which recently brought in regulations to regulate app-based taxi aggregators.

However, unlike in China where competition had already reached unsustainable levels between Didi Chuxing and Uber, India is looking to stop that from ever happening. While Ola has bowed down to regulations introduced by Karnataka and Delhi, rival Uber is fighting multiple cases against this in the High Court.

Uber says it is a technology platform and cannot be regulated under the Motor Vehicle Act. As the case continues to get heard before a bench in the Karnataka High Court, the Centre is planning to amend the law to clearly bring taxi aggregators under the Act. The move could have implications in the case which is yet to be seen.

 

The Financial Express reported that the valuation of Ola in its 50 million fundraising dropped to $4.2 billion from a peak of $5 billion in November last year. This markdown could be due to increased competition from global rival Uber in India which is seen as growing at a faster clip than Ola.

Experts say that Uber’s loss in China will compound the company’s focus on winning India, the last large open market in the world. The company has already said that it will allocate a substantial chunk of the $3.5 billion it raised from Saudi Arabia’s Public Investment Fund to grow its business in India.



Both Uber and Ola claim leadership in India; however, data from research firm suggests that Ola continues to dominate with two-thirds market share while Uber controls a quarter of the market. The model adopted by these firms revolves around the network effect, meaning the more drivers they have on their platforms, the more customers and business they are able to get.

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In order to win the market, both companies are spending hundreds of millions of dollars on subsidising rides for customers and providing drivers with big incentives to operate on their respective platforms.