New Delhi: US-based cab aggregator Uber on Wednesday said it is open to forming alliances in the Indian market but will not agree to a deal where it ends up with a minority stake.
Speaking to PTI, Uber COO Barney Harford said the company is “always open to conversations” as India is a core market for the SoftBank-backed entity. “The situation in India is very different from that in South East Asia (where the Grab deal happened). We have clear strengths in the Indian market and see huge potential in the market. We have no interest in doing minority deal going forward and the commitment we have to the Indian market is immense,” he said.
He added that Uber is “doubling down” on its investment in the Indian market, pumping in funds to expand its products, partnerships and technology headcount in the country. There have been reports about Uber and rival Ola joining forces in the Indian market. The speculations got stronger after SoftBank – an investor in Ola – joined Uber as an investor committing over USD 1 billion.
Apart from India, the two now also compete in the Australian market, with Ola recently launching its services in Perth and Sydney. According to sources, the two have held multiple rounds of discussions, including one just before Uber CEO Dara Khosrowshahi’s visit in February this year but the two parties are yet to strike a deal.
When asked if the companies have indeed held discussions for a potential merger, Harford declined to comment. “India is absolutely a core market, now and in the future. Uber’s success is hardcoded to India’s success…We are doubling down on our investments in this country like never before,” he said but declined to comment on investment details.
India is already among the top three markets (besides the US and Latin America) for Uber and accounts for 10 percent of its trips globally. Uber has been pumping in substantial funds to fuel its growth in India.
In 2015, Uber announced an investment of USD 1 billion in the country to expand its services. It has also set up a response and support centre in Hyderabad with an investment of USD 50 million. Harford said the recent deal with Grab in South East Asia has “freed up resources” that are now being invested across geographies, including India in areas like “people, products and partnerships”.
Last month, Uber announced a deal to sell its Southeast Asian operations to rival Grab for a 27.5 percent stake in the combined entity. Prior to the Grab deal, Uber exited two markets — China and Russia. Harford’s four-day tour comes close on the heels of Uber CEO Dara Khosrowshahi’s trip in February. Harford had taken charge as Uber COO in December last year. He is slated to visit Hyderabad and Mumbai during his visit from April 17-20. He also released a report commissioned by Uber through Boston Consulting Group. The report states that congestion costs in four Indian cities — Delhi, Mumbai, Kolkata and Bengaluru — were estimated to be USD 22 billion per year.
The report said Indian cities are 149 percent more congested than comparable cities around Asia with commuters taking 1.5 times longer to travel a given distance in peak hours (compared to travel time during non-peak hours) on an average. It added that up to 89 percent respondents said they plan to buy a new car in the next five years.
However, over 79 percent said they would refrain from buying a car if ridesharing matches car ownership for affordability and convenience. The report estimates that ride-sharing could reduce number of private cars by 33-68 percent. “By reducing private cars, increasing vehicle utilisation, improving public transport adoption, and optimising infrastructure planning, ridesharing could reduce congestion by 17-31 percent,” the report said.