Voices Monday, May 18, 2015 - 05:30
Taxi-service aggregators Uber and Ola are increasing their presence across the country Innovation is rare in India. For all the noise around "Make in India" campaign, we actually make very little in India. Our best cars are not Indian, neither are our best phones. We are perhaps good at mass-production because that requires a massive human resource serving blindly to the masters. Our software prowess lies not in innovation, but in brute force of human capital. And every now and then, when disruptive technological innovations shake-up the market to give the best service to the average consumer, the  corrupt kotwals of Indian economy, various governments in India, are standing guard, denying market access to the innovators. And it is often because status-quoist monopolists are using the state to throttle disruptive competition. I confess. I love Uber and Ola. They aren’t very cheap, but definitely affordable. The app gets me from point A to B at the touch of a screen. Most drivers are well-behaved, but of course, there have been unfortunate incidents like every other transport service in India. And I am pretty sure the apps have reduced drunk driving. There are millions of other urban, middle-class Indians who are using cabs and autos of Uber and Ola, and are very happy with it.  But when the government does not like them, they make business difficult for them. The latest attack on their freedom to do business is Department of Telecom’s notification to Internet Service Providers that they block their URLs. Apparently, Uber, Ola and TaxiForSure, which was recently acquired by Ola, do not have the necessary license from Delhi’s transport department. Let alone the fact that the government woke up to this only after a rape by a Uber driver was reported, it defies logic as to why a service-aggregator needs to take a service-operator license. Have our transport departments addressed the policy loopholes before ordering the shut-down of multi-billion dollar services affecting thousands of drivers and millions of customers? And this isn’t the first time taxi service aggregators have faced hurdles in India. In August 2014, Reserve Bank of India issued a circular stating that services like Uber cannot operate in India without a two-step payment process.  Uber complied by partnering with PayTM to facilitate that process. Then in December 2014, Uber was arm-twisted into paying service tax in India. Uber’s contention was that they drivers should be paying the tax since they are the ones making the money. So the tax department told them that they should collect the tax from drivers through a reverse-collection mechanism, and Uber agreed. The particular case of Ola is also illustrative of the government’s apathy towards innovative services. After the Uber rape case, the Delhi government went on a panic mode. Unable to handle the media pressure, the Delhi transport department banned all cab service aggregator apps including Ola on December 8, 2014. Ola appealed against the transport department’s order, and on December 23, the Delhi High Court set aside the transport department’s move. In spite of the HC order, the Delhi transport department has asked the Department of Telecom at the centre to block the URLs using Section 69A of the IT Act. Ola, for its part, has maintained that it is willing to accept any regulatory mechanism which aims to ensure traceability of drivers and safety of the passengers. But in the present regulatory framework, which understandably has no space for aggregator-apps, expecting them to either shut shop or get radio-taxi licenses will only lead to the death of a business model which has benefited millions of passengers. The problem with the government’s action seems to be that they are only eager to show action against service-aggregators in response to unfortunate incidents, and not provide solutions. It is also a question of app companies having to deal with a single authority for operating in the country. Industry insiders say that they are willing to work with the Union Government on creating a set of guidelines for safety of the passengers using their apps. But if they have to deal with every state government or city transport department in the country, then it will be too difficult for them to survive. We want our government to work with the service-aggregators to ensure safety, not shut them down altogether.

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