Home / Companies / Start-ups /  Karnataka govt cracks down on bike taxis linked to Uber

Bengaluru: The Karnataka transport department has cracked down on bike taxis associated with ride-hailing service Uber Technologies Inc. yet again, impounding at least 15 motorcycles in Bengaluru on grounds that the rules don’t allow two-wheeler cabs.

The latest crackdown comes barely two weeks after the transport department impounded 62 vehicles associated with Uber and 24 vehicles associated with other services, including Ola (ANI Technologies Pvt. Ltd).

Ola and Uber stopped bike taxi services thereafter. Uber, however, resumed services three days ago, said a senior state transport department official.

Both Ola and Uber, locked in a battle for market share in India, launched bike taxi services in Bengaluru on 4 March, to establish their grip over short-distance trips at a lower price point.

According to the transport department official, the vehicles seized in the earlier raid had been released against a penalty of 3,000-5,000 per vehicle.

The vehicles impounded in the latest raid face the risk of having their registration suspended for at least three months, he added.

“Uber does not have the requisite permission to operate bike taxis. After the raid last time, the company told us they will abide by rules, but they have restarted services," said Narendra Holkar, joint commissioner at the Karnataka transport department.

Uber did not respond to an e-mail seeking comment.

In a note on 21 March, Uber said the bike taxi service, called uberMOTO, was essentially a bike-pooling service and the company will not charge any service fee during the pilot run.

“After our launch, there was considerable speculation regarding the product’s legality. In the spirit of collaborating with the government, we have had extensive discussions with relevant authorities over the past few days. Today, we have made some modifications to our ongoing pilot service with a commitment to operate within the existing framework," the statement said.

The company continues to enrol riders on its platform for bike taxi services even though the transport department or existing rules do not have any provision for bike taxis in the state.

According to industry experts, bike taxis may help both Ola and Uber add significantly to their consumer base, by virtue of the cheaper price points.

But a new service at a cheaper rate will lead to additional cash burn for these companies as they will have to spend more on incentives for the riders and consumers.

According to industry executives, both Ola and Uber are losing money on every booking, which implies that if demand for bike taxis surges, so do their expenses.

Ola and Uber’s entry into the segment might put a host of fledgling start-ups under pressure. Ola and Uber have a significantly large existing user base to cultivate; hence, they may not need to spend heavily to market the new service, unlike others who might struggle to find space in the consumer’s smartphone, they said.

According to data provided by Tracxn, a start-up tracker, there are at least 20 bike taxi start-ups in India. Only Noida-based Now, Gurgaon-based Bikxie and local rivals Baxi and M-Taxi have raised institutional funding.

Bengaluru, where Ola and Uber have launched the bike taxi services, is home to at least seven such start-ups: Mu Ride, Pilot, Streetryderr, Rapido, HeadLYT, Hey Bob and Pillionaire.

In India, bike taxis run the risk of regulatory hurdles as none of the states, barring Haryana and Goa, acknowledges them as a commercial passenger transport service provider.

Globally, bike taxis have found significant traction in South-East Asia. Companies such as Singapore-based GrabTaxi and Indonesia’s Go-Jek are among the big names in the segment.


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