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Uber Is Disrupting Indian Taxi Market And Here Is The Proof

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Meru Cabs, Easy Cabs and Mega Cabs are names which are considered a success in the competitive Taxi market in India. But it seems that a technology backed startup, which has nothing but a humble mobile application to it’s arsenal has surprised the existing players.

These three radio taxi operators have filed a case with the Reserve Bank of India, stating that Uber is violating foreign exchange rules. The sudden alliance between these companies, which were earlier competitors, has certainly surprised quite a few veterans of this industry. Maybe they have realized that Uber is a way bigger enemy that anything they have experienced in their life-span.

Under “The Association of Radio Taxis”, they have filed a complaint stating Uber is in “gross contravention of Foreign Exchange Management Act (FEMA) and RBI mandate on credit card transactions in India”.

Uber market

Allegations By The Association:

When a customer takes a ride from Uber, they are directly charged via their credit/debit cards in dollars, and the whole payment is routed to the Netherlands-based Uber BV.

Later, 80% of the total fare charged by Uber is remitted back to the driver, via wire transfer from US-based Wells Fargo Bank, in Indian currency. As per the complaint, “Collection of fares by Uber on behalf of a taxi driver in India should qualify as a capital account transaction under FEMA and since such a transaction is not specifically permitted under the regulations.””

Another allegation is that Uber is accepting the payment in dollars, and making the payment in Indian rupees, whereas being a ‘facilitator of services’ or a ‘commissioning agent’, they should only charge their commission in dollars and the rest in local currency.

Uber: Disrupting The Status Quo

Uber is a success story, fueled by technology and smart marketing. Currently worth $18 billion, this startup is backed by Amazon founder Jeff Bezos and Google. The service and overall experience is being instantly liked wherever it starts it’s base.

As per Statista, Uber is world’s most valuable startup in the world, followed by AirBnB, Dropbox and Xiaomi, which are valued at $10 billion each.

UBer Statista

They entered in India last year, and within a year they have made their presence across 6 Indian cities. Globally, they employ around 1000 people, and in 2013 they clocked revenues of $1 billion (Rs 6000 crore), which is doubling every 6 months.

Indian taxi operators are feeling slowly feeling the heat, and this current filing of case with RBI can be termed as a desperate measure to stop it’s incredible growth. Something similar happened in London in June this year, then Taxi operators protested Uber’s success by stopping their services all over the city for a day. The next day, Uber announced that their rideship increased by 850% on the day of protest.

Uber was globally hailed as a startup which is disrupting the status-quo.

Indian Taxi Market: Hot Right Now

Currently, Indian taxi market is valued to be around $6-9 billion ( Rs 36,000 – Rs 54,000 crore), and investors have put in a lot of capital. TaxiForSure has raised $10 million recently, meanwhile EasyCabs, Meru, Ola and more have raised anywhere between 5000 – 9000 crore, individually.

There are existing traditional players which are mostly under unorganized business niche. But when technology backed, smart companies like Uber enter the market then the results are sometimes amazing.

Instead of filing such complaints, existing biggies of Indian taxi market should focus on refining their business models and inducing smarter, economical and customer friendly features.

Do you support such filing of complains by digging loopholes in the law? Do share your views by commenting right here!

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  1. […] best part about a free market like India is that, disruption isn’t a hereditary right of any organization or person; anyone with a firm determination and a […]

  2. […] we will have to wait and see how Uber, Amazon and others react to this! Uber may not find India too attractive anymore I […]

  3. Saurabh Sahni says

    Insightful. But, looks like you have a typo: 5000-9000 crore. Do you have a couple of extra zeros?

  4. Rituu says

    “But when technology backed, smart companies like Uber enter the market then the results are sometimes amazing.” – aren’t companies like Meru and Ola backed by good technology too?

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