In the 1980s, if one needed a cab in Mumbai, you had to travel to the closest stand (which was often quite far away). It was only in the 1990s that cabs became common enough to hail one using your hand. When Ola launched in 2010, it gave consumers a chance to call for a cab and book it at a press of a button.
The last decade has seen young businesses play a key role in identifying economic opportunities in the world’s most complex problems and addressing them with new and innovative solutions. However, urban transport has not seen the participation of entrepreneurs and is predominantly viewed as the domain of the public sector. At the same time, Indian cities are witnessing increasing pressure on urban infrastructure due to rapid growth of population and private motorisation. While cities like Mumbai have a fairly robust public transport system, people in cities like Delhi and Bengaluru struggle to commute daily.
Consumers crave convenient, comfortable, reliable and safe transport, and it is only now that companies like Ola and Zoomcar are in the picture addressing this critical need. We see new and innovative businesses involved in car-share (e.g. Justride), vanpool (e.g. Shuttl), electric vehicles (e.g. Ather Energy) and public transit apps (e.g. Transitpedia), which are increasing people’s mobility options. The urban consumer is now not compelled to use one mode of transport but can exercise a choice amongst at least two. This is also not accidental. Advancement in technology (for example, smartphones) has significantly helped reduce costs and increasing efficiencies, enabling people to connect instantaneously over a technology platform. Consumption patterns have also shifted from ownership to access. This trend is visible across geographies and the consumer peer-to-peer rental market globally is pegged to be a $26-billion business opportunity. Even traditional car manufacturers like Daimler and BMW are exploring newer markets by acquiring car-share companies Car2Go and DriveNow.
New markets in shared mobility
Across the world, high costs of parking and insurance are deterring individuals from purchasing private vehicles, leading to greater demand for shared services and acceptance of shared alternatives. Though shared mobility is a relatively old idea in India, (shared taxis have been available in Mumbai since the early 1970s) it has taken the interest of entrepreneurs and investors alike in the last few years. In August 2015, Uber and Lyft reported that in San Francisco, almost 50 percent of Uber rides were made with UberPool, and 60 percent of Lyft rides were made with Lyft Line. In India, we see the rise of shared trips and vehicles through platforms like UberPool, Bla Bla Cars, Ola Shuttle, and Zoomcar. Research demonstrates that ‘the global market for shared vehicles and mobility offerings is estimated to grow as much as 35 percent a year through 2020.’
However, several of these entrepreneurial initiatives are at loggerheads with regulatory bodies, while some are severely bootstrapped due to the lack of early-stage investments.
Building an ecosystem for transport entrepreneurs
In order to really build a robust ecosystem for mobility entrepreneurs, it is key to bring elements of an enabling ecosystem together, including early-financial, technical, and business support. In addition to this, leveraging more funding from the national government and private sector will create a larger movement towards better urban transport.
What is equally important is to offer an opportunity to strengthen the relationship between the government, mobility entrepreneurs, and investors to promote the urban transport opportunity in India. Convening multiple stakeholders and demystifying the potential for business in transport will not only enable businesses to achieve scale, mode-share, and impact but also push for regulatory reform and innovation. This will in turn spur new business, investment, and innovation by the private sector.
About the Author
At World Resources Institute (WRI) Sustainable Cities, Zainab Kakal works with young and dynamic transport businesses and help them integrate with public transport systems. Prior to WRI, Zainab worked in the social enterprise and sustainability space across the sectors of energy, construction, tourism and impact investing.