Uber ban setback for taxi app investors

Mumbai/Bengaluru: The horrific rape of a young Delhi girl by an Uber driver resulting in the ban of the taxi-hailing app and other cab aggregators has come as a setback for legions of investors in these tech startups. More than $300 million of investor money is riding between Ola and TaxiForSure, the two Indian cab aggregators, as they fiercely compete for market share across cities. Uber has in all raised $2.7 billion, the most recent being $1.2 billion just last week - a big chunk of which is planned to be deployed in India, its fastest growing market.

Some of these investors sounded a note of caution, saying the ban was a knee-jerk reaction and that it may damage investor sentiment. "We can talk about easing FDI norms, but unless we don't change the way we address crisis situations it will be all be the same. The focus of the government and other authorities should be on how to solve the real issue. It should not be like a war being waged on technology. These new platforms can be used to prevent such crimes and catch criminals," said Avnish Bajaj, MD at Matrix Partners India, an early investor in Ola.

Another investor in a cab aggregator startup who did not want to be identified said that banning Uber and others is not good for anyone. "We need a more collaborative effort, not like what has happened in Delhi. Put multiple layers of screening like the one that Uber has in the US," he said.

A change in the business model of these taxi technology companies is likely to emerge post the Delhi incident. Karnataka's state transport commissioner has laid down fresh norms for cab operators in the state. The department has asked cab aggregators to register themselves with the RTO and apply for city taxi permits to continue to ply in Bengaluru, which is a big market for these cab startups.

"City taxi services shall be connected with radio, telephone with company/companies' operational control room approved by the regional transport authority. The control room will have the facility to monitor the movement of motor cabs (city taxi)". No representative from Uber was present at the meeting of cab aggregators with the state government officials.

Anand Subramanian, director (marketing communications) at Ola, said, "In the light of the recent incident in Delhi, we are working on creating an additional layer of GPS tracking in all cabs on the platform." A TaxiForSure spokesperson said, "We will continue to work with the government closely, and follow the processes and procedures that were discussed and mutually accepted in the meeting."