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The Many Reasons Why Uber CEO’s India Commitment Rings Hollow

The Many Reasons Why Uber CEO’s India Commitment Rings Hollow

Dara Khosrowshahi said the company is deeply committed to taking innovation from India to the world

Uber has partnered with Delhi Metro to bring Uber Transit in India, but no timeline has been announced yet

Khosrowshahi said India is a top-10 market for Uber, but is it doing enough to sustain the momentum?

This year, CEO Dara Khosrowshahi has talked a lot about the new vision for Uber. The company, which in many ways revolutionised city commutes, is now positioning itself as the operating system for mobility and transport.

This new vision is displayed in full splendour in the company’s concerted efforts to bundle UberEats, cargo, carpooling, ride-hailing and public transit into one app. And having floated this cohesive version of Uber in Western markets earlier this year, Uber has now turned its focus to India.

Selling the idea of the future of mobility and Uber’s role in it, Khosrowshahi made his second visit to India all about laying out the company’s plans in this direction for the Indian market.

Khosrowshahi reiterated the token line about how India is an important market for the company and among its top 10 markets. The CEO called it an innovation gateway to the developing world thanks to a generation of demanding consumers.

“They want great prices and wants great service as well. So today the idea is to build in India and then export all around the world with local talent and with partnerships with public services as well.” – Dara Khosrowshahi

Announcing the launch of Uber Transit or public transport services in India, Khosrowshahi said the association with Delhi Metro is an example of how Indian transportation industry is ready to take risks and truly innovate with the startup and tech community.

Does Delhi Make Sense For Uber Transit Debut? 

Beyond laying out the vision, Uber didn’t announce any timeline about this association and when it will go live. In fact, the company plans to have kiosks or pick-up points at 210 metro stations, which is a humongous task by itself and is likely to take well over a year.

And that’s just in Delhi. Uber didn’t announce which other cities it’s bringing the public transport service to, despite metro services being available in 12 cities in India. If it is serious about making a difference in mobility in cities, then it needs to focus on cities where metro services haven’t developed fully.

Choosing Delhi as a starting point may prove too big a challenge for Uber as the capital expenditure here will be considerably higher. Operationally speaking too, a smaller launch city could have been better for Uber. And looking at the company’s financials and the slow growth, it may not be the best of times for this launch either.

UberEATS Failure And Exits

When it comes to revenue and growth, Uber has been struggling in the Indian market. Not only is it losing ride-sharing market share to arch-rival Ola, its food delivery business is also in deep trouble.

UberEATS became the talk of the town earlier this year, as it was in talks to be acquired by Zomato or Swiggy. However, no deal materialised and it continues to lag competition in the foodtech sector.  A TechCrunch report says that Bhavik Rathod, UberEATS’ India and Southeast Asia head has departed the company as has Deepak Reddy, head of central operations for UberEats in India among other executives.

Besides layoffs earlier in the year, the company had to let go more employees this month in the most recent round of downsizing. However, this doesn’t seem to deter Khosrowshahi who emphasised that the company has made a strategic decision to keep India at the core of Uber’s growth roadmap for the next 5-10 years.

“India has scale, and India also has the innovative talent here, so it’s a market I am very confident about. Some of our core products are becoming much improved on profitability scale, but we are going to continue to invest the profits from some of our mature products, into new products such as Uber Auto, UberMOTO as well,” Khosrowshahi added, but again there was nothing concrete about the company’s plans in this direction.

UberMOTO Hitting Roadblocks

While Khosrowshahi name-dropped Uber’s auto and bike-hailing, the UberMOTO service hasn’t exactly been in the clear with state governments banning it several times. The company is hopeful of a smoother ride ahead thanks to the revamped Motor Vehicles Act.

“After many decades we have a Motor Vehicles Act that allows government to streamline regulations. It is nice to see the process that the government is running now, which is quite consultative. We believe that various pieces of ride sharing activities and platforms will be formalised and standardised across the country which will make innovation easier,” Pradeep Parameswaran, president, India and South Asia at Uber said.

Among its other plans, Uber wants to make ride-hailing more convenient and safer for passengers, which is thanks to the government’s focus on the quality of service. “We want to keep an eye on surge or arbitrary pricing, offer better services for passengers, such as well-trained drivers. We will also keep in mind the crucial aspect of women’s safety,” a senior government official had said earlier.

Uber Chases Ola’s Electric Vehicles Plans

That’s not the only area of mobility which the government is looking to revamp. The push for electric vehicles will definitely impact ride-hailing companies as well, especially as they have to get drivers to update the cars and fleet partners to revamp multiple cars at once.

Uber has been woefully slow in this regard in the Indian market and is barely keeping up with the fast-paced mobility developments in the Indian market.

For example, rival Ola has made several big announcements for Ola Electric and has brought on board auto majors Hyundai and Kia as partners. Thanks to Ratan Tat’s backing for Ola Electric, the company is close to Tata Motors as well. In fact, after the failed experiment of offering rides in electric vehicles in Nagpur, Ola has a better sense of the challenges in this space as well.

Ola has also deepened their commitment to other business models in the mobility market with Ola Drive. It has also recently revamped its foodtech play with a different take on the cloud kitchen model.

The mobility revolution started with cab-hailing companies, but today it involves electric vehicle startups as well as those in self-driving vehicles, two wheeler rentals and bike rentals. Uber has already partnered with electric vehicle startup Yulu in Bengaluru to enable last-mile connectivity, but that’s limited to offering users a button to open the Yulu app.

Uber definitely needs to do more on this front to not be left behind in the EV revolution. In July, the company partnered with Sun Mobility to deploy electric autos on its platform but there’s no development on this front beyond that initial announcement.

At the same time, the government may push cab aggregator platforms such as Ola and Uber to convert 40% of their fleet of cars to electric vehicles by April 2026. The proposal was highlighted during government meetings in June. Ola and Uber might need to start converting their fleet to EVs from next year to achieve 2.5% electrification by 2021, 5% by 2022, 10% by 2023, before hiking it to 40% by April 2026. So far Uber has not announced any plans to move in this direction.

The slow movement of Uber on many of these fronts is contrary to how the company grew its cachet and brand recall around the world. Uber has been known to be fast and disruptive, and even though it says it wants to do a lot more in India or that it’s deeply committed to the market, one cannot help but feel that its moment of success has not yet arrived.

With Inputs From Nikhil Subramaniam

Image Credit: Krzysztof Nowak

Author

Bhumika Khatri

Inc42 Staff

Hailing from a business-oriented family, Bhumika has always been crunching numbers in her head. Words are her escape and she looks to find hidden startup stories. Reach her on [email protected]

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