NEW DELHI, Feb 24 (Reuters) – A new Indian taxi service, backed by the federal government, will offer drivers a share of business profits and no commissions, posing a direct challenge to U.S. giant Uber in the world’s most populous country.
Addressing drivers at an event on Monday night, India’s Cooperation Minister and Home Minister Amit Shah said the service will operate under a so-called cooperative model, where drivers can pay 500 rupees ($5.50) to become shareholders and share in profits after three years.
“The purpose of a taxi service is not to operate as a company and make a profit,” Shah said.
The government-backed move comes amid growing complaints from drivers for Uber and local Indian rival Ola about overcharges, low fares and high commissions.
When Shah first spoke about the plans last year, he told India’s parliament that the new taxi service would be like Ola and Uber, but “its profits will not go to any tycoon”.
Uber said in a statement that India’s mobility ecosystem is vibrant and rapidly growing and “healthy competition ultimately benefits everyone,” adding that it remains the platform of choice for drivers and riders.
Ola did not respond to inquiries from Reuters.
From taxi to bike
Uber and domestic players Ola and Rapido still dominate India’s ride-hailing market, offering services in hundreds of cities and towns. Grand View Research says the $2 billion market will grow to $11 billion by 2033.
Smaller private rivals such as BluSmart have previously tried to challenge Uber’s dominance, but so far there has not been any federally-backed challenger in India.
Shah said more than 250,000 drivers have joined Bharat Taxi and customers can book cabs through the mobile app. Currently available only in a few states, including New Delhi, the government plans to make the service available nationwide within two years.
Customers can also book three-wheeled auto-rickshaws and scooters or motorcycles on the Bharat Taxi app, which is similar to rival Uber.
“Bharat Taxi will also mortgage your cab and help you get a loan,” Shah said.
(Reporting by Aditya Kalra and Aditi Shah; Editing by Anil D’Silva)