In an effort to reduce car ownership and curb growing traffic congestion in major cities, India is examining the use of private vehicles as shared taxis, reported Reuters citing sources familiar with the matter.
In order to assess the economic and environmental impact of using private cars as taxis, commercial partnerships with companies including ride-sharing firm Uber Technologies has been undertaken by India’s federal think-tank, which is chaired by Prime Minister Narendra Modi, claims Reuters citing a government official involved in the process.
Even though it could heighten tensions with taxi operators that typically pay higher fees for commercial licences while facing more rigorous vehicle testing, for Uber and its SoftBank backed local rival Ola, this pending decision of increasing the availability of cars that can be used as cabs would be welcome news for them.
The three-month study will look at the safety, regulatory, tax and insurance implications, the Indian official said and added that the Indian government wants to reduce private car ownership.
With the aim of allowing companies to operate in India without ambiguity, the study is being conducted to set up a clear and reasonable regulatory framework for ride-sharing even though, another source who is involved in the process pointed out that the study is in its early days, reported Reuters.
The use of private cars by ride hailing companies has faced opposition from taxi operators in parts of North America although Uber is allowed to use private cars for ride sharing in countries such as Australia and Singapore.
Ensuring more efficient use of cars and helping in curtailing congestion are the advantages of sharing private vehicles, an Uber spokesman said.
“We are engaging with a range of stakeholders in India about the best way to realize this vision,” he said.
But in India where the ownership ratio is already low compared with other countries, such a move could dent car sales in the country. There are fewer than 20 cars for every 1,000 people in India.
While the Indian passenger car market forecast to be the world’s third-largest car market by 2020, among the top-selling carmakers in the country are Maruti Suzuki, Hyundai Motor and Tata Motors.
While both Uber and Ola are now cutting back on fringe benefits to driver in an attempt to be profitable, these companies have built their taxi “fleets” in India by offering incentives such as free smartphones and cash bonuses to drivers.
Analysts say that the supply of vehicles at a low cost would get improved by allowing the use of private cars as taxis.
“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, drivers, who have paid hefty fees to get a commercial taxi license, could be antagonized by the proposal.
Any new law must ensure private car drivers go through the same background and safety checks and concerns around the safety of passengers would also need to be addressed, said Shah.
(Adapted from Reuters)