India is currently brainstorming the idea of using private vehicles as shared cabs in an attempt to reduce traffic congestions in major cities
Prime Minister Narendra Modi has partnered with companies such as Uber Technologies in order to assess both the economic and environmental impact of using shared cars.
Increasing the number of cars that can be used as cars would be good news for Uber and its SoftBank backed local rival Ola; however, it could heighten tensions with taxi operators that usually pay higher fees for licenses and face more rigorous car testing.
The government aims to reduce private car ownership, while also looking at the safety, regulatory, tax and insurance implications.
Even though the study is still in its early days, the main idea is to set up a clear and fair regulatory framework so that companies can operate without ambiguity.
Uber is allowed to use private cars in countries such as Singapore and Australia; however, they have faced opposition from taxi operators in North America. An Uber spokesman mentioned that shared vehicles can reduce congestion and ensure more efficient car use.
“We are engaging with a range of stakeholders in India about the best way to realise this vision,” he said.
Impact On Car Sales
On the other hand, such a move could lead to a decrease in car sales, which is already low compared to other countries.
Among the top-selling carmakers in India count Hyundai Motor and Tata Motors. Uber and Ola have both built their “fleets” by offering incentives such as cash bonuses and smartphones to their drivers, but are not cutting back on these expenses in an attempt to be profitable.
Analysts add that allowing the use of private cars as taxis would improve the supply of vehicles at a low cost.
“If most of these cars are affiliated with Ola and Uber then it’s a win for them,” Neil Shah, research director at consultant Counterpoint Research, said.
However, this proposal could infuriate current drivers, who have paid high fees to get a commercial taxi license.