Ola to bank on local innovations to compete with Uber's West-centric model

Uber still accounts for up to 40% of the Indian ride-hailing market

Bhavish Aggarwal, the co-founder and CEO of India’s largest taxi-hailing service Ola, said that the firm’s focus on local innovation such as the Ola Auto has helped it compete against rival firm- Uber- in India.

“Uber is a strong competitor and they have done better in the West but we emphasise on our roots,” said Aggarwal at Elevate, a startup event organised by the Karnataka government on Tuesday. The state is looking to promote entrepreneurship from smaller towns and is identifying over 100 start-ups that would be recognised during the event.

Auto-rickshaws, which are cheaper to hire than cabs, have traditionally served a larger section of India’s population in cities. While bringing autos under Ola’s platform was no easy feat, the company worked on it because it felt it was taking steps towards solving an existing problem.

While Uber, the most valuable privately held startup in the world, had experimented with bringing autos onto its platform in Delhi, the company has largely stuck to offering cabs to customers. Aggarwal has long opined that Uber would fail in the country since it was only replicating the model it had perfected in the West.

Aggarwal’s confidence comes from the fact that Uber has been forced to retreat from China as well as Russia, after being beaten by local firms in both these markets. While one could consider it a trend that might continue in India, especially at a time when Uber is reeling under the pressure of several scandals, experts say the openness of India’s markets could yield different results.

Uber might not be a leader on the innovation front in India as it opts to wait for rival firm Ola to test new features and services but the company has still managed to capture 35-40 per cent of India’s ride-hailing market since its entry in late 2013.

With a large investment in Uber’s global operations from Softbank- Ola’s biggest funding source- on the cards, there’s a possibility that India’s ride-hailing market might get upended. Softbank that controls large stakes in both firms could also suggest a merger in order to cut its losses.

"Softbank's founder Masayoshi Son ('Masa') has such a grand vision and over the past few years, his ability to take risks has only increased, being backed by a lot of capital and passion. Execution has, thus, has only increased so far," added Aggarwal.

Ola might continue to lead the market and bring solutions more suited for customers in India first, but Uber isn’t calling it quits just yet. The firm has not only kept merger talks off the table as far as its deal with Softbank is concerned, it has also increased its investments in India by launching new features such as allowing payments to be made through the Unified Payment Interface (UPI).

The company is also looking at India as a base for development with a technological centre being set up in Bengaluru for churning out solutions for drivers. Uber has taken several of its India-first solutions to other markets, making learnings from India important to win other global markets.