Source | Linked In | Shashwat DC | Features Editor — Moneycontrol.com/ Editor & Blogger
Recently, the Maharashtra government put forth a set of draft rules for regulating the taxi industry. These rules have been in the works for some time as various taxi-operators (especially in the city of Mumbai) have been demanding “uniform code” for the industry. The chorus for such rules has come from the lower end (kaali-peeli taxi-wallas and the autorickshaws) and the upper end (radio-taxi operators like Meru and TabCab). And yet, the funniest part is that there is already a stringent set of laws that regulate the functioning of these operators. So why the hell are they asking for more?
Actually, they are not. These taxi stakeholders are demanding something more mundane, something basic. Something that spells as parity. The crux for any business to function normally is that all the players in the sector will be treated same, namely, rules and regulations should be the same for all the players. So, what is good for the goose, should be good for the gander. Right? Apparently not, when the gander is a multi-billion ride share MNC that goes by the name of Uber.
In fact, Uber has raised a stink regarding the Maharashtra government’s draft, opposing it with all the muscle that it can muster. The US-based cab aggregator has decried the rules, calling them restrictive and archaic. The company even launched a high-octane public petition, seeking the lay citizen to sign-up and fight against these restrictive norms. The petition paints a rather gloomy picture, namely, if the rules are implemented, it “will mean an end to the Uber I know and love today”. Rather than talking just logic or talking about the facts that are hurt the ecosystem, the petition tries to tug at the emotional chords — love, shove and the works.
But do Mumbaikaars really ‘love’ Uber? They are smart to not fall in all such kitschy stuff. You see, taxi-riders in Mumbai don’t really love Uber or Ola, but yes they do seem to hate the kaali-peelis and autorickshaw-wallas. After decades and decades of suffering the indifferent and condescending attitude of these monopolistic ruffians, they have finally found deliverance at the hand of these cab aggregators. This welcome shift started with start of Meru in the city and blossomed with Ola and Uber. To put it rather bluntly, the taxi-riders in the city like the convenience of a no-nonsense service that is way cheaper than the kaali-peelis. I mean Rs. 6 per km is even cheaper than taking your own car out. That is secret behind that “love” that Uber claims it receives. Yet, this incentivised love is usually not monogamous, the denizens will shift to anyone that offers a bigger bonanza. If there was a cab operator that offered Rs. 3 per km ride, of course, more would ‘love’ it than any Uber or Ola. There’s no emotion in economics.
But what is the guarantee that this bonanza will last forever? Let’s look at the instance we have from China. There was a similar play of taxi wars in China, where two taxi-operators Didi and Uber ran a huge discounted war (in which Uber lost some $2 Billion in two years, or some Rs. 6700 crores in a single year) and disrupted the industry. Eventually, all the other taxi companies folded shop. In the end, only Didi remained on the scene. This created a huge monopoly, where now Didi was able to dictate the fares, as per its convenience. It stopped the crazy incentives for the drivers and the customers as well. Now, could this be the way the Indian market be heading to? Can we learn lessons from China?
It is in this light that these draft rules of Maharashtra Government need to be assessed. Are they progressive or regressive? Do they protect the rider or not? An unbiased evaluation seems to paint a quite different picture than the one Uber wants us to see. Not surprisingly, the online petition seems to be full of half-truths, deceptive statements that reveal some but conceal much. To put things in perspective, let’s examine the 3 statements that Uber has highlighted and is tom-tomming about:
Mandatory minimum fares and other price restrictions
For starters, the way things function in India, we need pricing control. Right from the drugs and medicines sold over the counter to the mineral water is available in the mall. The concept of Maximum Retail Price or MRP is a mainstay in India. The draft regulations talk about fare control for taxi industry as well, about the need to set up minimum and maximum fares. But then Uber is conveniently highlighting the minimum aspect, not talking about maximum fare restrictions. Why is Uber not ready for an upper-limit cut-off? Could it be because this is where the “surge pricing” function will come into play in the future. If it really cares about the customer, why is it shying away from a maximum fare restriction? Isn’t that why state governments of Delhi and Karnataka imposed restrictions on surge pricing.
Notification from Government of Maharastra ………http://mahatranscom.in/pdf/Aggregator%20Rules-15_10_2016.pdf