Centre To Launch ‘Sahkar Taxi’ To Compete Against Ola, Uber

In a move that is expected to rattle giants like Ola, Uber and Rapido, the Centre has announced the launch of a new state-backed ride-hailling service called ‘Sahkar Taxi’. 

Home and cooperation minister Amit Shah announced the launch of the new platform while addressing the Lok Sabha. Shah said that the new initiative will onboard two-wheeler and four-wheeler taxis, as well as rickshaws.

He said the platform is aimed at giving drivers’ full control over their earnings, free from commission cuts by third-party platforms. The minister noted that the service will allow cooperative societies to register vehicles without involving intermediaries. 

“In the coming months, on a cooperative basis, we are going to launch a government cooperative ‘Sahkar Taxi’ service like Ola and Uber. The service will register two-wheeler taxis, rickshaws, as well as four-wheeler taxis. The profits from this service will not go to any big industrialist but will go solely to the drivers of the vehicles,” the minister said.

Ola, Uber Challenger In The Making

The launch of the new state-backed initiative comes at a time when ride-hailing platforms have come under fire for all the wrong reasons. Both Ola and Uber continue to face backlash over high commissions (up to 20%), erratic earnings and lack of transparency for drivers. 

Drivers have often protested against the platforms over the last few years, demanding fair platform commissions and higher earnings.

On the consumer side, users often complain about surge pricing and ride cancellations.  

The new platform may alleviate some of the pain points as drivers will likely be able to take home all their earnings, without hefty commissions. End customers will potentially get to avail cheaper rides. 

The last few years have seen a plethora of new ride-hailing startups emerge in the country, including BluSmart, InDrive, and Namma Yatri, with differentiated offerings. But, very few of these have been able to chip away at the duopoly of Ola and Uber at scale.

Despite these issues, the success of Sahkar Taxi will hinge on building a high-end tech infrastructure, onboarding fleets at scale and delivering customer experience that rivals established players.

The Pricing Wars

The new entrants in the ride-hailing space have tried to outdo Uber and Ola by offering new commission models which leave more money in the hands of the drivers.

Among these, Namma Yatri, developed by fintech startup Juspay and backed by Nandan Nilekani’s Beckn Foundation, started with a zero-commission model. It currently offers two payment options to auto-rickshaw drivers: INR 25 for unlimited trips per day or INR 3.50 per trip, with no charges after 10 trips.  

On similar lines, Rapido also introduced a zero-commission model for drivers, and currently allows users to set a higher price per ride to get guaranteed rides. 

While InDrive takes 10% commission per ride, which includes a 5% platform commission and GST for the ride, BluSmart’s USP is its EV vehicles. However, it is pertinent to mention that BluSmart has been in the news for the wrong reasons over the last few weeks due to its close ties with Gensol Engineering, which is facing debt and liquidity issues.

Amid the shift to a subscription-based model, Uber also rolled out a zero commission model for auto drivers on the platform last month.

At the heart of all these is the Indian ride-hailing market which is projected to clock volumes to the tune of  $11.64 Bn by 2029.