Will bike taxi services like Rapido and uberMOTO be able to break government barriers?

Legal or illegal? With the growing number of two-wheelers and vehicles on the road, is it time India adopts the Southeast Asian style of bike taxis? If so, what are the legalities and what challenges do we face today in India?

Summers in Chandigarh hadn’t ended yet. The well-lined and straight lanes have few bikes and cars zipping past. It is a rather welcome change from the jammed lanes and chaotic traffic of Bengaluru. I am here for the launch of uberMOTO’s launch in Chandigarh. The bike sharing segment the San-Francisco based ride-sharing platform was launched along with the Punjab government’s Apni Gaadi, Apni Rozgar Yojana (loosely translated to ‘your vehicle, your employment scheme’).

Prabhjeet Singh, General Manager, Delhi NCR & North India, Uber, told YourStory:

“We aim to generate another 10,000 entrepreneurial opportunities in Punjab in the next one year and a total of 45,000 opportunities in the next five years. By recognising how we can transform the urban mobility landscape in our cities through progressive regulations, Punjab is leading the way in bringing the change that our cities need and providing riders an opportunity to travel smartly without worrying about issues like traffic, congestion and last mile connectivity."

Interestingly, around the same time a year back, uberMOTO and Ola’s bike sharing platform in Bengaluru launched, but due to regulatory concerns both the platforms had to be shut down within a couple of weeks.

Bike sharing as a concept isn’t new. Everyone has hitchhiked once in some way or the other. The only difference here is the introduction of technology and an app, which makes it easier to validate the authenticity.

Working around the loophole

Over the past few years, sharing economy has been growing. According to a Brookings India report, the sharing economy is believed to touch $335 billion by 2025. And yet, in India, few state governments have been open to the idea of bike sharing and bike taxis. It still falls under the regulatory loophole of transportation.

Aravind Sanka, Co-founder Rapido, a bike-taxi service, says,

“It definitely isn’t an easy job. Operating and convincing regulators of the workings and benefits of bike taxis is a continuous process. But there have been shifts and changes since the beginning of this year. Since the central government has requested the state governments to legalise bike-taxis, the task is becoming easier.”

Ride-sharing still isn’t a part of the contract-carriage permit under the 1989 Motor Vehicles Rule. And more so when you want to use a mode of transport for public transportation, it is by law that the vehicles take in a yellow license plate.

The yellow license plated bikes

The traffic woes of several cities can be easily combated with allowing bike taxis, few states have authorised the use of bikes as a commercial vehicle. Since December last year, Telangana, Rajasthan and UP have authorised and approved commercial bike taxi services.

Rapido currently claims to have over 4000 bikes in Bengaluru, and over 1000 in Gurgaon. The company claims to be doing over 3500 rides a day and claims to have seen a 4x growth since last year. While the new draft regulations are giving hope to many others, uberMOTO continues to surge in its growth, seeming to focus on just the markets where it can break in.

The aftermath

While there are about five million taxis operating in India, a Credit Suisse report adds that there are about 155 million two-wheelers running in India. Many bike taxi services have had a tough time and have to shut operations like Zingo, Dot, TuWheelz, Headlyt, and Rideji to name a few.

The surviving ones include – uberMOTO operational in nine cities- Faridabad, Gurgaon, Noida, Ghaziabad, Hyderabad, Jaipur, Ahmedabad and now Mohali (including Zirakpur and Kharar) and Ludhiana, Ola bike, which is operational in Hyderabad, BYKUP, based in Jaipur, Baxi, which has raised Rs 9 crore in funding, and Rapido, which is going strong in Bengaluru and Gurgaon. It has raised funding from Google Southeast Asia and India VP, Rajan Anandan and Hero Motorcorp Chairman Pawan Munjal.

A ray of hope

“With Uber, the idea has always been to ensure faster and better connectivity to everyone. In countries like southeast Asia and India, bike taxi seems to be the best solution for that objective,” explains Prabhjeet.

Yet the deepest pockets of these are, without doubt, Uber and Ola. Looking at the regulatory concerns many investors are even wary of the space. However, there seems to be a shift from December last year.

Till 2015, Goa was the only state that allowed bikes as a public service vehicle. This was soon followed by Haryana, which introduced bike as a public service vehicle, where two-wheelers can be registered as commercial vehicles.

However, the Central Guidelines released in December 2016, gave a big impetus to the idea of bike sharing. The first market to come up with Bike Taxi Regulations was Gurgaon.

“The regulators today are also becoming aware of the growing needs and requirements of the Indian market. They are willing to listen and that is what I aim to continue doing. Bridge a gap and make governments understand how embracing technology can help progress and make this a win-win situation for all parties involved,” explains Shweta Kohli, Head of Public Policy, Uber.

A report by UITP India states that India’s public transport is not able to keep pace with the increase in demand, thus leading to an increase in ownership of private transportation in the past two decades. The report quotes Vahan digital registry, which points out the number of registered digitised vehicles to be at 195.6 million as of July last year. Also, 75 percent of the registered vehicles are motorcycles or two-wheelers in India.

Number of two-wheelers in India

Chan Park, General Manager, Southeast Asia, Uber adds:

As bikes have been commonplace in India, riders have swiftly embraced the option to book a motorbike ride via the Uber app, a mode of transport that has long been the preferred way to get around cities in the country.

For instance in Hyderabad, an uberMOTO is requested every 18 seconds. In an effort to reduce congestion in the Pink City of Jaipur, no new vehicles have been added to ensure better asset utilisation of existing two-wheelers. Another example of how bike-sharing complements public transportation is Gurgaon, where one out of every four trips on uberMOTO are to/from metro stations.

It is still illegal

While the number of vehicles in the city is increasing alarmingly, several states are yet to open up to the idea of bike sharing. HG Kumar, Karnataka Additional Transport Commissioner, has often reiterated that Bengaluru’s traffic is growing at a rapid pace. Bikes can certainly solve this problem, yet not much can be done without having legal guidelines in place.

Interestingly, Karnataka and Delhi had concerns with Ola and Uber’s cab-aggregation model as well and more recently their respective share and pool services.

Also read: Ola and Uber’s carpooling woes: should a 1989 rule define the sharing economy of 2017?

The Punjab government looked at uberMoto launch as an easy way to ensure that the youth of Punjab get employment. At the launch, Manpreet Singh Badal, Finance Minister of Punjab, pointed out that with employment the growth of a state is bound to happen, and Uber gives them the flexibility of choosing their work timings as well.

Gives the rider the choice

For most of the bike taxi services, the riders look at a ride as an extra source of income. Parminder Kaur, a mother of two, and an uberMOTO rider, in Chandigarh says,

“The idea is to ensure that two people can get to a location as fast as possible, without any hassles. I have been riding on Uber for three months, where I have met different kinds of people. I make close to Rs 25,000-30,000 in a month, depending on the number of rides I choose to book. Also, the timings are purely basis my convenience.”

Mohan Chatterjee, who was earlier a delivery boy for a food delivery service in Gurgaon, is now an uberMOTO driver. Working close to 12 hours in a day, he claims to do over 20-22 rides and earns anywhere between Rs 15,000 to Rs 20,000.

To yellow board or not to yellow board

Since most of the bike taxi services work on the peer-to-peer model, there isn’t much that can be done in this case. It is the private vehicle of an individual that he or she chooses to use. However, the minute, it becomes a form of semblance of a public transport, it becomes illegal.

A lawyer, who works for a bike taxi service company on the condition of anonymity adds:

“While the law does talk about use of a yellow board for commercial purposes, bikes aren’t yet a part of motor vehicle acts. With the current regulations, we are hoping the shift will happen making it easier to do business.”

How safe are they?

Even with the massive launch in Punjab, Chandigarh, on the other hand, seems to face some issues. The state transport authority had issued challans for close to 12 bikes last month and has deemed them to be illegal.

One of the biggest concerns most governments and transport commissioners have with bike-taxis is the issue of safety, especially for women. All the bike taxis follow the same aggregator model as cabs where the rider details are shared and every ride is tracked

“We also ensure that the rider details are sent to the passenger in advance,” adds an Uber spokesperson. Each bike comes equipped with first aid kits, and has the paperwork in place. The bikes also mandatorily have to carry a pillion rider helmet along with them.

The Southeast Asian giants

In Southeast Asian countries, platforms like Gojek, Grab and Uber are thriving. Chan adds,

“The Indonesian market serves as a case that is illustrative of the region, where we are encouraged by the prospects for as well as the impact of ridesharing and uberMOTO.”

Citing a study by AlphaBeta Analytics, he adds that Uber users save 38 percent time with uberMOTOR and nine to 18 percent with uberX compared to other modes of transportation available earlier.

“Projecting a huge potential for shared mobility solutions to substitute for personal car or motorbike trips, the report suggests that by 2020, the number of daily personal car and motorbike trips could be over 40 million,” explains Chan.

Currently, the average running cost of a bike is believed to be $0.10 or Rs 4-5 per km and has life span of 15 years. And if like Ola, companies decide to go the electric vehicle way, then the cost drops. Also, an average bike taxi trip length in India is less than 10 km.

Arvind adds: “The cost of a bike ride is significantly lower than a taxi service. It, therefore, has a larger and wider audience base.”

Southeast Asia’s ride-sharing market is predicted to grow from $2.5 billion in 2015 to $13 billion by 2025, according to a report co-authored by Temasek and Google. Despite the inherent biking culture in most of the south East Asian markets, the idea of pushing a button and getting a ride is new.

What has been a big boost to the bikesharing project, therefore, has been the way people in this region have readily embraced technology.

A recent study on Rethinking Urban Mobility in Indonesia, demonstrated that if all personal travel shifted to shared modes, including public transport and ridesharing, more than 71 million car trips could be saved from Indonesian roads by 2020. Further, shared vehicles could reduce over 46,000 hectares currently devoted to parking in 33 Indonesian cities. This has the potential to reduce cost of mobility by up to 65 percent versus owning a car.

Similarly in India, according to Morgan Stanley Research, private car ownership is more aspirational in India - a country with growing Internet access and a large population of young people who are concerned about pollution and open to ride-sharing. India has all the right ingredients to become one of the largest markets for shared mobility in the world.

Road Transport and Highways, Government of India, has also recognised the value of shared mobility and innovation in its recent report titled, ‘Report of the Committee Constituted to Propose Taxi Policy Guideline to Promote Urban Mobility’. The report highlights the need to encourage shared transportation assets and limit private car ownership to alleviate the acute congestion and pollution in cities.

Breaking the ice

While the process is long drawn, companies like Rapido, uberMOTO, Baxi, and Ola are working closely with the regulators to change the norms and rules. Many have faced issues like vehicles being impounded by the government, but with the regulations introduced late last year, the companies hope to see policy changes soon.