Prices expected to drop further in the Indian taxi market

The Indian cab market has seen extreme rapid growth of organized players, with a substantial amount of investor-driven funds riding on them. A number of big and small players have emerged in the radio taxi market. Now the infusion of funds has also drifted to outstation taxis with a clutch of startups getting funded like BlaBlaCar, GetMeCab, and BookCab. The customers are assured of a good time with jaw-dropping taxi fares, as startups fight with each other to gain turf.

Roshni Pachauri, an executive at a Bangalore-based MNC, is proudly recounting about the experience that led her to sell her car. She sold her personal hatchback car last month, closely following the advice Travis Kalanick, the famous UBER CEO gave regarding the future of personal cars. Travis had said in one of his press releases that it has become financially lucrative to let go personal cars in favor of cab hailing services. The last push which made Roshni go ahead with her decision was a cab experience she had on a trip from Bangalore to Mysore. She said she paid a flat Rs. 3000/- after availing some incentive discount from an online taxi startup Getmecab. This made her realize that she could save money on taxi hire (against owning a car), with options at her disposal within Bangalore and outside Bangalore.

We caught up with the founders of few of these innovative startups. Ashish Kumar – the founder of BookCab, says, “We use technology to give us an innovative edge over other companies, besides helping our customers save money. Our eco-friendly policies ensure we reduce our ecological footprint for a sustainable future” .

Kapil Sehgal – the co-founder of GetMeCab, said, “Startups pride themselves on innovation. We have been able to stay ahead of the pack with new services like one way taxi trips. Now, we have gone a step further and introduced a flat price for all outstation trips, eliminating hidden charges like state tax, toll tax, driver charges.”

Realizing that cost saving alone might not be enough, some of these long distance taxi hailing apps are looking at the safety perspective as well. Closely tapping into the safety issue grabbing headlines, a female driver taxi service called She-Taxi started last year in Kerala. As it states on its site: “She-Taxi cabs are explicitly designed and developed to safeguard the safety of women travellers especially, the working category, students, tourists.”

With customers getting used to discounts in taxi space, taxi startups are looking at niche categories to innovate and stand out from the crowd. But is the discounting practice from startups sustainable? Newer Categories like self-drive cars and shared cabs, all of which started with much fanfare are now feeling the margin pressure.

Vivek Jhorar, an IIM alumnus, and a startup consultant based out of Delhi, says, “With funding squeeze set to come in the picture for next couple of years, startups are looking to focus on core business principles like overheads and bottom line more closely. This will result in sustainable innovation, and prove beneficial to the startup ecosystem in the longer run.”

Road travel in India is five times bigger than traditional railway travel and most business is shared amongst bus and taxi service providers. The taxi market in India is estimated to be over $9 billion (about 60,000 crore), with an annual growth of 15-18%. More than 90% of this market is unorganized.