Uber to divert part of China funds to India, after Didi Chuxing deal
New Delhi: Uber Technologies Inc. is stepping on the gas in India.
After agreeing to sell its China business to bigger rival Didi Chuxing, the San Francisco-based ride-hailing company has started to divert to India a significant portion of the $1 billion investment it had planned to make in China this year, a top company executive said.
The company plans to increase the team at its Bengaluru engineering centre to 50 from 15 by the end of the year; the San Francisco-based team that catered to Chinese operations will now complement the Bengaluru centre, Uber India president Amit Jain said in an interview.
Uber, the world’s most valuable start-up, in July gave up its costly battle for users in China, and said it would merge its China unit with Didi Chuxing in a deal that valued the merged entity at $35 billion. Uber would become the largest shareholder in Didi, which would, in turn, invest $1 billion in Uber’s global entity.
“How that helps us from the Indian perspective is two-fold: one is we were spending over a billion dollars in China annually. So, that stops. We can see a portion of that being invested (in India) as we continue to grow the business in India,” Jain said.
“Number two is: we had several resources that were dedicated to our China business. Like a 150-person product and engineering team that was based in San Francisco and that was completely dedicated to the China business. So, you will see a portion of that being focused now on the India business.”
And, while Uber will continue to subsidize every ride it offers commuters in India, the larger focus will be on customization of product offerings and technologies in India. These will then be evaluated to determine if they can be used in other Uber markets.
For instance, Uber engineers in India are working to overcome problems posed in areas with low or no data network where a driver may not be able to respond to calls.
Jain has managed to introduce payment by cash in India, a first for Uber globally. UberMoto, which it launched in Bengaluru and subsequently in Gurgaon, enabling users to tap a button and get a motorbike ride in minutes, was introduced in Jakarta last week. The next big customization is “dial an Uber”.
“So, customizations that are catered towards the market will continue to happen and that has been the focus of the dedicated India-focused team and if some of these customizations are successful in India, we will take them to some other countries in the world,” he said.
Uber faces fierce competition in India from Ola (run by ANI Technologies Pvt. Ltd), which is valued at $5 billion and is present in more than 100 cities in India, which gives it more than three times Uber’s penetration in the Indian market.
The US company has seen significant growth in its business in India. Jain claimed that Uber’s completed trips have risen from 165,000 a week in January 2015 to 1.6 million in January 2016; the number has since increased to 5.5 million at the end of August.
After Uber’s merger in China, India is now the second-largest market for the taxi aggregator globally and the local operations account for 12% of Uber’s global market share.
Uber has 400,000 drivers on its platform, of whom 200,000 are active ones.
Jain said he would like to see an overhaul of the Motor Vehicle Act. Ride-sharing companies such as Uber and Ola have come into conflict with the transport authorities in cities like Bengaluru and New Delhi because of regulatory grey areas in which their services fall.
“So we are saying that let us get regulations that recognize the kind of companies that we are, which is tech companies providing transportation services,” Jain said. “We want them (government) to recognize our space,” he said.