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An Industry Analysis of the

Taxi aggregators Industry in India

Anavi Someshwar

Deepak Ramakrishna

Vinay P. Jain
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INDEX

Main Findings 3

Introduction:

A. To the Industry 4-5

B. Main Statistics 6-8
C. Introduction of the aggregators in India 9

Industry Analysis 10-15

Role of Government 16-18

SWOT Analysis 19-22

The road ahead 23-25

Future Growth in the Radio Cab Industry 26-27

Bibliography 28
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MAIN FINDINGS

 Radio cabs began to fail due to shortage of vehicles.

 State Governments play a major role in the taxi aggregate industry.
 Automobile manufacturing sector provide great discounts to taxi aggregator
companies.
 In the presence of multiple companies, Ola and Uber are the main competitors having
the maximum market share, leading to price wars. This would eventually lead one
company to collapse as the other would sooner or later utilise all the resources.
 The industry is simple yet, complex structure. The present situation is still weak and
competitive. However, the industry hasn’t reached saturation and there is immense
scope for expansion.
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INTRODUCTION

A. To the Industry

“Our foreign-exchange reserves when I took over were no more than a billion dollars; that is,
roughly equal to two weeks' imports” (Singh, 2000)

Apart from the rapid economic growth, the Indian government started to market the
subcontinent as a travel and wedding destination. With the influx of people into the country, there
was a major demand for end to end, comfortable and private transport. Until 2003, there was no
improvement in the sector, the end to end cab companies were either run by small private
companies, which were highly disorganized and mostly extremely expensive or there were the
government pre-paid taxi’s, which were relatively much cheaper but lacked the comfort that one
would like while choosing to ride in a cab (Kumar, 2015).

The following paper aims to look into the emergence of a new sector of radio cab services
which dates back to 2003 and till date has been contributing immensely to the Indian economy
over the years, and has made India a more viable option for firms to set shop citing no difficulties
in transportation of labour to and fro within the major cities of India, at affordable and most
importantly safe travel. The paper looks to delve into the position that radio cab firms hold in the
Indian economy as of today, while being backed with statistics as well as stating expected growth
patterns that the industry might hold in the years to come, in the Indian subcontinent.

There was a time around the early 2010’s, when a market mainly dominated by frequent
airport travellers was hounded by a huge inflow of capital to increase efficiency as well as
effectiveness of local cab companies. The aforementioned era was pretty much a golden era for
these local cab companies. The industry soon came to be dominated by 4 major market players-
Meru Cabs, Easy Cabs, Mega Cabs and Tab Cab. The four companies battled it out with each
other in predominantly the metropolitan cities. The companies at the point shuttled the cities with
a combined fleet of roughly 15 thousand radio cabs between the years of 2011 and 2012. As the
year progressed, the radio cab industry started to face problems of excess demand and with the
radio cab industry expected to grow by an unprecedented 31 % over the following five years.
However, the future seemed bright for the industry in question with an expected compound
Annual Growth Rate (CAGR) of 25% in the number of radio cabs. Out of all the suppliers in the
industry, Meru Cabs was the undisputed market leader despite its higher pricing tactics (Das,
2015). This trend was rather unheard of, when a company is priced higher than its competitors, but
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yet is the market leader. The simple reason behind this was because Merucabs believed and
focused on employing educated drivers, as well as making sure that the cabs were clean and they
were well maintained.

In most of the cases, cab agencies did not own the cabs. Their work relates to matching the
demand for cabs with supply of cabs. In such situations, commuters looking for economical
alternatives for commute within the city and to the airport were liberality of these agencies. In
return for this matching of demand and supply, cab drivers advanced fixed commission per month
to the cab agencies for their services and most of these bookings were done through call centres
and very few were routed through the web. This process created hassles for all. Booking cabs on
demand was not possible at all times due to the lack of supply and with decline in the fleet size of
non-radio taxis due to ageing cabs, the significant growth of India’s urban population, increase in
disposable incomes, high traffic on other forms of public transport, greater perceived comfort
compared to driving one’s own vehicle official reimbursement of taxi fares, influx of tourists and
increased airport trips, were some of the factors that contributed to the soaring demand for radio
cabs. This led to constraints on the supply side for many reasons. Firstly, there was a lack of a
pool of educated drivers, costs of maintaining cabs according to agency specifications were high
and government intervention and regulation further spoilt the party for these radio-cab drivers
(Rahman & Anand, 2014).

Along with the above mentioned constraint, another major factor affecting the supply of
radio-cabs was the commission fees which had to be paid to local cab agencies. Whether the
drivers catered to the demand of radio-cabs or did not, they were still liable to pay commission.
This only meant added workload and therefore, many drivers refused to join the radio-cab industry
even though they earn 70 percent more than their non-radio cab counterparts. Further, the ceiling
on the number of permits that a cab agency could hold, qualification requirements for cab-drivers,
size restrictions and fare regulation from different state governments hampered business. This
negative regulatory environment proved to be and still proves to be a matter of huge concern for
cab drivers.

The fall of the radio-cab industry resulted only and only from the shortage of cabs. It is
estimated that there was shortfall of 3000-5000 cabs every day and to meet this exceeding
demand, local cab agencies had no choice but to either form conglomerates ( for example-Taxi for
sure) or to increase their scale of operations. This required greater investment inflow through
offloading of equity and even after five years in this business, Radio-cab companies had yet not
become profitable.
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B. MAIN STATISTICS

Cab services have in the recent past served as a huge boon to society. With applications so
easily available on the smartphones, local travellers in huge metropolitan cities, no more have to
live at the mercy of taxis or auto-rickshaws. Following is a list of major cab services in India:

1. Ola Cabs: Ola cabs is an app based cab service that though launched recently is already a
market leader. With a large number of cabs plying as its franchisees, travellers get a variety of
cabs to travel in, from share cabs to minis to sedans. With Ola cab drivers well trained, the service
is known to be safe for solo women travellers due to a well set up tracking system. Payment
methods are flexible and the traveller has the choice of paying via card or cash. Ola fares are also
reasonable, they begin at an average of Rs. 100 for the first 4kms and then Rs. 2.75 for every
subsequent kilometre travelled.

2. Uber Cabs: Uber is an international brand making a mark in 350 nations worldwide. Uber
drivers, like Ola drivers are well maintained and mannered. However, Uber being an international
brand is more professional in dealing with customer care and training programs. Fares are rather
competitive. Uber prices also have a base of RS. 100 with a minimum fare of Rs. 150. Payment
options are available: cash, card or e-wallet.

3. Meru Cabs: Meru Cabs was one of the first and largest radio operated cab services in India
plying in all major cities. It had gained a huge popularity and loyal clientele due to it efficient and
effective customer services. Though Meru Cabs accept payment in the form of cash as well as
card, they began with ordering a cab via telephonic conversation and still continue to do so. Even
though its major competitors have made taxi travel easier by providing for an app, Meru Cabs
haven't yet managed to do so.

4. Easy Cabs: Easy Cabs is a relatively old non app based cab service that began in the year 2000,
and was launched with a strong customer following in all major cities of India. With over 6000
vehicles in their fleet, Easy Cabs is not chosen by many due to its tariffs being higher that Ola or
Uber.

5. Tab Cab: Tab Cab is a service that was launched only in Mumbai where one could book a cab
over the phone by providing information about pick up and drop location, time and address. With
reasonable prices, Tab Cab formed a stronger clientele and loyal customer base by joining hands
with local corporate firms to ferry employees from the workplace to home and vice versa. They
were successful in operating for such a purpose and thus created a niche market for their business.
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6. TaxiForSure: TFS is a multi-city operating taxi service that provides the customers to book
either on the web or via the app. Its convenience has enabled it to form a niche customer base of
corporate clients. However, TFS has only in the recent past been taken over by Ola Cabs.

Other taxi services include: StarCityTaxi, Wings Radio Cabs, Mega Cabs and City Cool Cabs to
name a few.

The taxi service industry has been expanding and has seen a tremendous growth in the past 6-
7 years. Only in the past 4 years, 2400 crore rupees of venture capital has been pumped into
various companies of this industry.

However, in India, the organized sector of the taxi industry constitutes only a minor part of 4
or 5% in terms of number of vehicles. The rest of the cabs are operated by private fleets of 15 to
20 cars and are individually present only in a few cities.

The following graph shows the market size of different kind of taxi services in India:

Market Size

Unorganized market Radio cabs Affiliators Aggregators

Keeping these statistics in mind, it can be concluded that aggregators like Ola and Uber are
only a small section of the market has been taken over, leaving them with a large scope and
massive opportunity in front of them for expansion.

Even though, aggregators like Ola and Uber came into the market much after the original
radio taxis like Mega cabs and Meru, the aggregators have already taken over in terms of fleet
size, number of cities covered, prices, availability, convenience, offers etc.

The following table gives statistical data of the same:

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No. of Fleet Booking Booking Booking Credit

cities size through through through card
call (%) site (%) app (%) payment
(%)

Meru 12 10,000+ 35 30 15
Cabs

Mega 7 3,500+ 90 10
Cabs

Ola 22 25,000+ 40 10 50 25

Uber 11 13,000+ 100 100

(Doshi, 2016)
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C. Introduction of the aggregators in India:

2013: Uber: started in

2010: Ola Cabs: 2011: TFS.com: started
Bangalore under a
started in Mumbai in Bangalore under the
parent comany that
under the name of name of Serendipity
Infolabs Pvt. Ltd operates under Uber
ANI Tech. Pvt. Ltd
Technologies Inc.

Top aggregators namely, Ola and Uber are all app based services. Respective apps of all the 3
aggregators are available on both the Apple Store as well as the Google Play Store. According to
statistical data, Ola is the most popular, followed then by Uber (In India).

Evolution of Organised Taxi sector in India:

India saw the inception of Mega cabs with small fleets in the year 2011. However, the market
started to undergo some traction only with the introduction of services such as Meru, Easy Cabs
and Savaari in 2006.

•market companies owned the entire fleet and had salaries drivers
Phase 1: fully •high capital costs: EMIs, maintainance
owned fleets •Bookings via telephone
•Mode of payment: Cash

Phase 2: Fleet •Small fleet owners register their vehicles with the brand
•Low capital expenditire: low maintainance
aggregation •Bookig via telephone, website
mode •Mode of payment: Cash/card

•Part of the fleet owned by the company and other part from the aggregation
model
Phase 3: The •Better availabily and service
hybrid model •Low costs
•Bookings via telephone,webite and app
(current) •Mode of payment: Cash/card/e-wallet
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INDUSTRY ANALYSIS

FACTORS AFFECTING RIVARLY AMONGST COMPETITORS

To what extent does a pricing rivalry or nonprice (e.g. Advertising) erode the profitability of a
typical firm in this industry?

Characterization Future trend

(current)
Degree of seller concentration? The demand of the Might increase with
organized sector the possibility of
amasses a total of increase in entrants
8% of the total
sector. With the
increase in demand,
the degree is
witnessing an
upward integration.
Rate of industry growth? Constant growth Increasing at a
decreasing rate
Significant cost difference among Price wars.
firms? Consumers are
highly benefitted by
the ongoing price
wars.
Excess capacity? There is a potential Potential
if more players enter
the market.
Cost structure of firms: sensitivity Let us take an High
of costs to capacity utilization? example of a mid-
range car, it costs
about 7 lakhs. Given
the amount that the
person stands to
make taking
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depreciation into
account. If a single
car were to be
driven round the
clock, by different
drivers, it makes the
system more
efficient, as the
depreciation does
not change.
Degree of product differentiation Product Very Low
among sellers. Brand loyalty to differentiation is
existing sellers. Cross price very low. Brand
elasticity of demand among Loyalty could be a
competitors in the industry? topic which is setting
in. Cross price
elasticity will be the
same, considering
the use of similar
fuel type.
Buyers cost of switching from Negligible Negligible
competitor to another?
Are prices and terms of sales Yes Yes
transactions observable?
Can firms adjust prices quickly? Yes( Given: Yes
Monetary Backing)
Large and/or infrequent sales Large and Frequent Large and Frequent
orders? orders(Nation Wide,
Real time demand)
Use of “facilitating practices” Use of promo codes Yes
(price leadership, advance and/or discount
announcement of price changes)? codes so as to avail
discounts.
History of “cooperative” pricing? Irrespective of price Will tend to happen, if
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wars, there is a there continues to be

cooperation which is price wars between
set as the price floor. two or more
companies
Strength of exit barriers? As the cars are not High
owned by the
company, there is no
asset management
except for their
offices. Exit barriers
are mid-range.

FACTORS AFFECTING THE THREAT OF ENTRY

To what extent does the threat or incidence of entry work to erode the profitability of a typical
firm in this industry?

Characterization Future trend

(current)
Significant economies of scale? No No- unless the cabs
start to be owned by
the cabs
Importance of reputation or Yes Yes
established brand loyalties in
purchase decision?
Entrants access to distribution No No
channels?
Entrants access to raw materials? No No
Entrants access to technology/know- Yes Yes
how?
Entrants access to favourable Yes Yes
location?
Experience based advantages of Depends on the Same as the present
incumbents? inbuilt case scenario
infrastructure and
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already existing
transportation
modes available
in the city.
Network externalities: demand side Larger consumer Large
advantage to incumbents from large base, supplies to
installed base? all income bases
Government protection of High High
incumbents?
Perceptions of entrants about Very high. Guilds High, if the following
expected retaliation of tend to often trend is set to stay on
incumbents/reputation of incumbents protest, such as course or increase.
for “toughness”? auto unions often
tend to go on
strikes, asking for
higher prices for
their services.

FACTORS AFFECTING OR REFLECTING PRESSURE FROM SUBSTITUTE PRODUCTS

AND SUPPORT FROM COMPLEMENTS

To what extent foes competition from substitute products outside the industry erode the
profitability of a typical firm in the industry?

Characterization Future trend

(current)
Availability of close substitutes? Easily Available Yes
Price-value characteristics of Lower price Lower Price
substitutes?
Price elasticity of industry demand? No No
Availability of close complements? Yes Yes
Price value characteristics of High Depends on the
complements? complement used
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FACTORS AFFECTING OR REFLECTING POWER OF INPUT SUPPLIERS

To what extent do individual suppliers have the ability to negotiate high input prices with typical
firms in this industry? To what extent do input prices deviate from those that would prevail in a
perfectly competitive input market in which input suppliers act as price takers?

Characterization Future trend

(current)
Is supplier industry more No. the radio cab No
concentrated than industry it service sells its
sells to? services to the
BPO industry as
well as the
common public,
which tends to be
far more
concentrated.
Do firms in industry purchase Yes. The Same as the present
relatively small volumes industries main day scenario
relative to other customers of target base are
supplier? Is typical firms not other
purchase volume small relative industries but
to sales of typical supplier? rather the
common public.
Yes
Few substitutes for suppliers Yes. Yes
input?
Do firms in the industry make There can be They will. considering
relationship specific relationships or the fact that a
investments to support partnerships company which is
transactions with specific formed among the involved in transport
suppliers? said taxi company needs to constantly
and a corporate increase their market
enterprise. base
Do suppliers pose credible No No
threat forward integration into
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the product market?

Are suppliers able to price NO. The suppliers Np.
discriminate among prospective cannot price
customers according to discriminate
ability/willingness to pay for given the level of
input? pay, as all
consumers are a
similar source of
income for them.

FACTORS AFFECTING OR REFLECTING POWER OF BUYERS

To what extent do individual buyers have the ability to negotiate low purchase prices with typical
firms in this industry? To what extent do purchase prices differ from those that would prevail in a
market with a large number of fragmented buyers in which buyers act as price takers?

Characterization Future trend

(current)
Is buyers industry more Yes Yes
concentrated than industry it
purchases from?
Do buyers purchase in large No. Each Taking a period of
volumes? Does a buyer’s consumer is an time, there is a
purchase volume represent large integral part, but possibility of high
fraction of typical seller’s sales not a whole. volume demands from
revenue? individuals
Can buyers can find substitutes Apart from the Yes
for industry product? unorganized
sector and public
transport, No.
Do firms in industry make Yes Yes, possibly
relationship specific investments
to support transactions with
specific buyers?
Is price elasticity of demand of The price Same as the present
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buyer’s product high or low? elasticity of day scenario.

demand is
moderately high
but the
willingness to pay
decreases with
every unit
increase in the
price of the
service.
Do buyers pose credible threat if Yes Yes
backward integration?
Does product represent Yes- Transport Yes
significant fraction of cost in
buyers business?
Are prices in the market Take it or leave it Take it or leave it
negotiated between buyers and price price
sellers on each individual
transaction or do sellers post a
“take-it-or-leave-it” price that
applies to all transactions?
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ROLE OF GOVERNMENT

With Increase in overall supply of cabs, there was an increase in violations by the fleet of IT
based transportation aggregators. To keep a check on cab drivers and technology based transportation
aggregators, the ministry of road and highways issued an advisory. State governments were to either
adopt the advisory or use the advisory as a base of formulating their own rules and regulations for the
purpose of implementation of a standardized code of conduct. The advisory laid down several
specific rules and regulations and also demanded the fulfilment of certain requirements in order to
create a clear distinction between taxi operators and technology based transportation aggregators.
Some of the key points of the advisory are listed below:

 Availability of information about the valid registered vehicle on the aggregators along with a
24*7 customer grievance cell.
 Aggregator must notify its customers about its policy on fare, registration of taxi’s and
driver’s credentials, fare-sharing ratio between taxi owners and drivers, customer safety etc.
 Aggregators must also train the drivers according to the guidelines laid down in motor
transport workers act of 1962.
 Aggregators must also conduct programmes relating to gender sensitisation.
 Aggregators must ensure that all vehicles booked under them have a legal registration and
commercial insurance covering third party risks. These permits have to be valid at all time.
 Taxi drivers must have a permit to ply on road.
 Taxi drivers must meet all the guidelines to fulfil safety requirements which include the
presence of location tracking systems, accurate distance and time meter which can be
interoperable between more than one platform and the standards for such meters will be
provided by the relevant ministry.
 Street hailers cannot be accepted.
 Drivers must be allowed to operate at their own discretion without the requirement of
minimum hours of work. They must also be allowed to work on multiple platforms.
 Drivers must be compliant to the entire process of documentations which ranges from
obtaining a commercial driver’s license to obtaining a police verification report.
 Strict rules barring convicts from using platforms of aggregators have been laid. Anyone
convicted from driving under substance and alcohol influence or for committing any other
crime listed under the criminal code of procedure, 1973, within the last seven years as on the
date of application shall not be permitted to use these platforms.
 After compliance with all the terms and conditions laid down by the state transportation
department and subject to satisfactory performance, aggregators will be given licenses with
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validity of 3-5 years and all consumer complaints will be taken into consideration during the
renewal process of licenses.
 Local police must be made aware of the description of the car and drivers and in case of any
emergencies, the local police closest to the point of location of the vehicle must be contacted.
 Aggregators must ensure that there is no discrimination during the selection of drivers. All
drivers must go through police verification and aggregators must verify if the drivers have
any criminal backgrounds.
 Drivers also cannot discriminate during the time of service. The driver shall not refuse
service, speak in a derogatory and harassing tone with the passenger and rate the passengers
on the basis of caste, creed, sex et cetera.
 In case of receiving a complaint about a driver, the aggregator must suspend the license of the
driver, at least during the period of investigation.
 Every customer must be issued with a receipt. This receipt can either be in form of an email
sent to the passenger or as a hard copy.
 The state government will also set the maximum fares which can be charged in compliance
with the motor vehicle act in order to create a sustainable and fair market for other taxi
operators to work in.
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SWOT ANALYSIS

"Companies can't hope to take advantage of or control the external factors until the internals
have been objectively assessed," – Mitchell Weiss

Along with reaping benefits, every industry has its own setbacks. We analyse these
benefits and setbacks in terms of internal and external factors affecting the growth of the industry.
The internal environment mainly consists of strengths and weaknesses of the business whereas the
external environment comprises of threats and opportunities.

The internal factors are mainly those factors which are readily available to the industry and
firm. Listed below are a few examples of internal factors:

 The financial resources of a firm. These resources can be in form of funding, investment
opportunities and different sources of income.
 Access to physical resources such as factories, equipment and central business districts et
cetera.
 The entire framework of human resources in a firm.
 Access to different natural resources.
 Right to patents and copyrights.

The external factors affecting Industry and firms are those factors over which a firm has no
control. These factors may directly or indirectly influence the workflow of an industry and firm.
Listed below are a few examples of external factors:
 Change in Market trends
 Change in economic trends
 Demographics and financial policies of a country
 Buyer and seller relationships
 Condition of the political environment.
In this paper, we will be analysing the strengths, weaknesses, opportunities and threats of Ola
and Uber with respect to the Indian industrial economy.

SWOT ANALYSIS OF OLA
STRENGHTS
 First mover advantage
 Top class service
 Acquisition of Taxiforsure made it
India’s no.1 Company
 Rapid growth due to online application
 Increasing awareness due to aggressive
advertising
 Large amount of venture capital has
been invested in Ola, thereby making
them financially stronger
OPPORTUNITIES
 Market is yet to be organized, therefore
high chances of capturing market share
 Increase in technological advancements
leading to higher users of smart phones
in India
 Increase in disposable income of the
population
 Consumers tend to prefer convenience
and comfort over doing things on their
own
 Usage or ‘kill or die’ policy leading to
acquisition of smaller players in the
market
1
Customers tend to use the services of the aggregator who provides the cheapest ride
|someshwar|Ramakrishna|Jain|20
WEAKNESSES
 Drivers often tend to misbehave with
the commuters and this has an effect on
the image of the brand as drivers are the
face of the company
 Due to increasing incentives being
offered, the company is burning out its
cash reserves in order to gain market
share
 Top management of Ola tends to start
price wars often and with a huge
competitor like UBER, this strategy
will not work.
 Drivers are dis-incentivized to work for
longer hours as Ola offers lesser
commission than other cab aggregators
THREATS
 Deep pockets of UBER allows them to
burn more cash than Ola
 The constantly re-inventing radio-cab
industry
 Government Regulations
 Lack of customer loyalty.1
 Rising competition from other
companies in the market and from other
unorganized sectors(
autorickshaws/taxis)
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SWOT ANALYSIS OF UBER

STRENGHTS Weaknesses
 Global Recognition  Business Model can be easily copied
 High standard of service and has been copied.
 Very little competition  Lack of clarity on driver and UBER
 Huge cash reserves relationship
 Dual rating system ensures clarity  No bonding between customer and
 Flexible system for drivers. Drivers UBER
have the option of rejecting customers  UBER creates privacy concerns as it has
if needed2 a database of all the places customers
 UBER has the highest valuation in the visit
taxi aggregator industry. This leads to
increase in overall investments
 Drivers go through intensive training
before being accepted as users of the
platform
OPPORTUNITIES THREATS
 Customers in India are adopting the  Overvaluation will lead to over-
lifestyle of the west and UBER is an spending in economies where there is
integral part of western culture in no scope of growth
Today’s world. UBER can capture  Increasing concerns of misbehaviour on
market share through right kind of part of drivers can lead to banning of
advertising UBER in certain countries.
 UBER can easily increase its valuation  With increase in fleet size, number of
by plying in more and more cities. This frauds and scandals are also increasing.
will appeal to investors and therefore, This damages the image of the brand
will increase their cash reserve.  Self-driving cars will hamper the
 UBER can help in converting the growth of UBER
economy into a cashless economy.3  Cheaper alternatives like the traditional
taxi services can also hamper growth of
UBER

2
Before regulations were imposed by the Indian government
3
UBER operates on cashless basis around the world. India is their only market where drivers physically collect printed
money. All other payments are routed through credit cards.
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 Low profit margins for drivers may urge

them to leave the platform and shift to
some other platform.
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THE ROAD AHEAD:

This particular sector in India has a massive scope for improvement and development, and is
still far from saturation. Though the industry has a good scope of growth in tier 2 cities, the market
will still hold onto big metropolitans as their primary target. Therefore, one will able to conclude that,
there could be the presence of price wars and fleet variations in the near future. The companies will
try to lower the costs, in order to reduce prices and will be able to compete with its other local
transport competitors.

It is important to understand the complex yet simple structure of the industry at the moment.
There are two big players trying to capture market share through different strategies eventually
boiling down to price wars. This is hazardous for the growth of the Industry as it will lead to the
collapse of one of the two players because one of them is bound to eventually out-run the others
resources. As a group, we believe that the best way forward for the industry is either in form of
segmentation or co-operation.

The firms in this industry can segment their markets and look to cater to these markets in
specific along with focus on the market. For example, Ola launched its premium car services known
as ‘Ola Lux’ where they will provide commuters with luxury cars at dirt cheap prices like Rs. 250
base fare + Rs. 20 per kilometre. This is not segmentation entirely yet, as it is too early to judge the
direction in which Ola will move forward in the near future but it will a smart move on part of Ola to
get into the premium markets for two main reasons: 1) Uber has a bigger reserve of funds so
pointless price wars will reduce Ola’s credibility and 2) The entire premium taxis market is clear. No
other company has a base in this sector and car companies prefer to tie up with local aggregator
companies rather than foreign companies because they have to pay a lesser amount as brand loyalty.

Uber on the other hand, can concentrate on making the platform more user and driver friendly
for now. Increasing complaints have been received from drivers against the company’s payment
schemes. However, what is widely acknowledged is the fact that Uber in their initial years in India
understood that India is a country that runs on paper currency and therefore, they changed their entire
policy of cashless transactions in India just to take control of this ever increasing market.

Overall, the taxi aggregators Industry in India is still a weak industry whose competitive
environment is rapidly changing. As India’s population increases, the demand for transportation will
increase and one thing common about every human being is that everyone loves to travel comfortably
and when such good taxi services as being offered at such marked down prices, there is nothing
really that can stop the growth of this industry. However, increasing governmental interference is
 |someshwar|Ramakrishna|Jain|24

restricting the growth of the industry as a lot of time is spent by companies tackling government
issues and the main focus is then shifted from growing the company to saving the company.
 |someshwar|Ramakrishna|Jain|25

Future Growth in the Radio Cab Industry

Over the course of this report, you would have come across a lot of data pertaining to as to
what the radio cab industry is all about. In this section, we are going to talk about why it is
growing and what are the possible future trends that may be seen in the years to come.

Secondly, the various state run governments are also playing a major role in the
growth of the radio cab industry. The government believes that in order to attract more tourism as
well as FDI, the transportation system in the state must be at its peak. It is important to note that
the Delhi Government has come to a decision to increase the number of cabs on Delhi road by a
staggering 300%. This comes in lieu of the amount of pollution that is being recorded in the
Capital City in India. The Delhi government believes that, by increasing the number of radio cabs
in the city which run either on electricity or cleaner fuels, there will be a point when the radio cabs
can be an answer to their prayers. It is also important to note that the Mumbai government has
been urging a guild of 55,000 kaali-peeli drivers/Owners to shift from their taxis to more up to
date automobiles (Dalal & Verma, 2015).

Finally, the enormous growth that the radio cab service industry is witnessing is also because
of the automobile manufacturing sector. Many Automakers such as Toyota and Maruti Suzuki are
providing enormous discounts on certain models of cars to taxi operators. The Automakers are
also coming out with CNG variants for their cars, as the taxi operators prefer this as it has a lower
operating cost than the other fuel types (Pathania, 2012).

However with sizeable growth comes a lot of variables which may and can cause harm in the
middle part of a firms operations especially in a place like India where most of the labour being
employed is uneducated. There have been cases where the two largest market holders in the radio
cab industry have been asked to shut operations for a brief period because there were cases in both
companies where a few drivers were accused of raping female customers.

Furthermore, both companies have a certain peak rush added amount which is a surcharge or
in other words a surge. This has angered many customers, as the customers believe that the
companies have been falsifying information so as to earn more revenue. There is a possibility that
representatives of both Ola and Uber were part of a discussion and unanimously agreed on having
the concept of surge pricing.

The future of the radio cab industry according to us, doesn’t lie in the hands of the firm, but
rather in the hands of a third party. In situations like this, foreign investment can boost up the
companies willingness to wage a price war against its compatriots like UBER is trying to do in the
 |someshwar|Ramakrishna|Jain|26

Indian subcontinent. However we firmly we believe that the future lies in the hands of companies
which are aggregators of all the previously stated cabs. For example, if I were an individual
looking for a cab from FLAME university to Aundh. At the present time, I would go on to the
radio cab’s app, look for the closest cab, look at the price estimate and then if I believe that the
amount I pay as well as the amount of time that I have to wait is reasonable, then I will go ahead
and proceed with the booking. Now what if, I went on to one single app, which aggregated all the
cabs irrespective of the company on one platform, over here I could see the closest cab to me may
it be an Uber, Ola or a Meru. Furthermore I could compare the price estimate of all the given cabs
and then book it with a single click instead of doing a minor research on the best cab for me at the
moment.

A business becomes successful or is bound for success when its product makes an
individual’s life easier and more efficient. Given the case of a taxi aggregator, if a company like
Ola or Uber were to pay these taxi aggregator’s a small percentage of money for every ride that is
booked from their app. According to us, that is when not only is the aggregator benefited but so is
the customer as well as the firm. After all, who isn’t benefited from a transparent war of prices?
 |someshwar|Ramakrishna|Jain|27

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 |someshwar|Ramakrishna|Jain|28

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