Chennai: When Hemant Jain quit his logistics job in 2009 to start a dial-an-autorickshaw service, he wasn’t expecting Rickshawale’s October launch to coincide with a showdown between the Maharashtra government and Mumbai’s auto drivers over accusations of tampering with meters to inflate fares.

While autorickshaws are ubiquitous on Indian roads, they are regarded as a necessary evil because every trip is fraught with the expectation of a haggle over the fare at the end of the journey.

Image makeover: Radio Tuk Tuk’s Sulabh Mehra with his fleet in Gurgaon. The company hopes to lower costs by shrinking fuel wastage from driving around looking for customers. Photo: Priyanka Parashar/Mint

Any perceived improvement could help deter the inclination of the government to increase supervision.

“The complaints about autowallahs harassing passengers and misbehaving are increasing and so we need to set up a central control room to curb this problem," said A.K. Saroha, director of urban transport at the ministry of urban development.

Despite being the second-most preferred mode of transport after buses, the vehicle is regarded with ambivalence by authorities struggling to ensure that traffic flows smoothly in cities. In Mumbai, for instance, they are not allowed into downtown areas beyond the suburbs of Bandra and Sion. The slower speeds of the autos are seen as impeding the faster cars on the road.

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Fair-price hurdles

Fair-priced auto services may depend on the willingness of urban transport authorities to remove limits on driver permits, allow tariffs to float with input costs and encourage private companies to develop large fleets offering economies of scale.


“Auto drivers are in the grip of private financiers and, moreover, governance is playing a big role in determining the economics of this operation, escalating costs, impacting the behaviour of the driver and increasing victimization of passengers," said Akshay Mani, a Mumbai-based transportation researcher at Embarq, part of the World Resources Institute’s environmental think tank.

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A soon-to-be-published study by the group shows the number of autorickshaws in Indian cities range from 15,000 to 30,000 in so-called tier-II cities (1-4 million people) to more than 50,000 in tier-I cities (more than 4 million), and they serve 10-20% of daily person trips on motorized vehicles.

Pavan Sharma is a slightly built 31-year-old who quit farming in Bihar in 2005 to move to Delhi, hoping to earn a stable income as an autorickshaw driver.

Six months ago, Sharma pooled his savings from six years of driving a rented vehicle to buy his own three-wheeler for Rs1.5 lakh. But he ended up borrowing double the amount at nearly 20% interest from a moneylender to buy a permit. And that’s still at the lower end, as interest rates can be as high as 50-60%, according to Delhi-based NyayaBhoomi, which lobbies for rights of auto drivers.

Permit problem

Cities such as Delhi, Mumbai, Bangalore and Pune don’t issue new permits because they don’t want to increase traffic congestion. But that has stoked illegal, high-priced resale of Rs300-500 permits for amounts ranging from Rs70,000 to Rs4 lakh in some cities. Tamil Nadu lifted its ban on autorickshaw permits only last year, but Chennai auto drivers still don’t use meters amid high debt levels that are a hold-over from a closed permit system.

“Everybody is out to loot us," said Radheyshyam Gupta, a Mumbai auto driver, who said he never tweaked the meter to show higher readings, but spoke in defence of those who did.

In the 10 years he has driven autos, the lanky 32-year-old from Uttar Pradesh has often dealt with bribe-taking middlemen who smooth the way during the annual road transport office inspections. More recently, some Mumbai customers have sought to pay a lower fare after falsely alleging that the “meter is tampered with", he said.

Gupta signed up with Rickshawale last week after hearing of the Rs151 inaugural membership and a “strictly pay-by-meter-only" policy. He now bids for customers via Rickshawale’s Rs1,500 pager device and hopes to avoid bargaining with customers.

Jain and two others started the venture with a Rs60 lakh investment on a 15-person call centre in central Mumbai and a tracking device that’s 20% of the cost of conventional satellite-based positioning systems.

Gupta, a father of two, doesn’t own his autorickshaw and pays the vehicle owner half the Rs600-700 he makes every day.

“Despite high-level talks about financial inclusion, banks don’t consider auto drivers to be bankable," said Ramesh Prabhu, chief executive of Three Wheels United (TWU), a Bangalore-based not-for-profit group that in two months will start an SMS-based autorickshaw rental company, where 10% ownership rests with drivers. About 50 drivers are currently enrolled to create groups of five (similar to those in microfinance) to pool in savings and avail of loans, Prabhu said.

TWU is in dialogue with banks to allow daily loan repayments—the equivalent of the Rs150-300 rent paid to owners—in line with the drivers’ cash flow to lower the likelihood of default.

Part of TWU’s Rs6.9 crore funding from Dutch environmental group Enviu will support the creation of a small, flat-screen computer or tablet with global positioning system (GPS) capabilities that can also be fixed in the auto and display revenue-generating text, photos and videos for advertisers and news providers.

Economies of scale

“Advertising revenue can certainly prop up driver incomes," said Embarq’s Mani. “But any branded or dial-an-auto service cannot sustain at levels of 50-100 vehicles. You have to scale up to 1,000-2,000 autorickshaws as only then vehicle capital and maintenance costs can go down (through bulk discounts) and technology investments can reduce unnecessary trips and cut fuel costs."

At least one call-an-auto firm is pinning its hopes on scale. Padmashree Harish, the 42-year-old founder of Bangalore-headquartered EasyAuto, is seeking investment of Rs10 crore to build a fleet of 1,000 autos after the company’s 2006 entry failed because city authorities refused to let the company charge drivers a membership fee and customers didn’t see value in subscribing to the service.

Harish’s latest capital-intensive model, which Rickshawale’s Jain avoided as he didn’t want to deal with a workforce of drivers or buy vehicles, is already in operation in Gurgaon in Haryana, which has seen a surge in demand for such last-mile connectivity after Delhi Metro began services to the city.

Last year, Sulabh Mehra, 26, started Radio Tuk Tuk in Gurgaon spending Rs1.5 crore on an 80-auto fleet that’s expected to touch 150 by the end of the year and break even in 2012.

The company hopes to lower costs by shrinking fuel wastage from driving around looking for customers—such trips comprise 25% of the total daily distance travelled by Mumbai autorickshaws, according to Embarq.

Revenue could also get a boost from reduced waiting hours—auto drivers in Chennai spend nearly 50% of their time waiting for passengers to hire them, according to a 2011 study by Chennai-based public policy group CityConnect.

Auto drivers make Rs350-400 a day after paying Rs250 rent to Radio Tuk Tuk by charging a minimum Rs50, more than double the starting rate charged by autos in Delhi, since it’s a pick-up service, Mehra said.

“Buses and trains in most cities are very crowded and we don’t mind paying a premium to a dial-an-auto service that is willing to pick us up from home," said 75-year-old retired accountant Murlidhar Vasudev Kamat, who used Rickshawale’s service in Mumbai last week. “Even people who have cars hail an auto as there’s no parking available at their destination."

Shamsheer Yousaf in Bangalore, David Shaftel in Mumbai and Nidhi Misra in Delhi contributed to this report.

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