What The Hell America!

India’s homegrown ride-hailing startups are forcing Uber to rethink its strategy.

In February, the Silicon Valley giant ditched its commission-based pricing for two- and three-wheeler segments, allowing drivers to pay as little as nine rupees (11 cents) for a daily subscription.

An Uber spokesperson said the company had recognized the market trend set by rivals and had adopted a similar strategy in the low-cost mobility segment to remain competitive. The spokesperson did not comment on whether Uber would replicate its commission-free policy for cabs. In the cab segment, drivers say Uber has slashed fares by 40% to retain its customer base, leaving them with little cash after completing rides.

Mobility experts believe the shift to subscription models could alter ride-hailing economics globally. But as Uber cuts fares to hold on to its customers in India, they warn that deepening price wars could stifle the growth of upstarts and worsen drivers’ working conditions. Drivers, meanwhile, believe the innovative pricing models are temporary bait to lure them. 

“Any uptick in growth, particularly in offering different platforms with varying attributes, is an interesting development for a large market like India,” D. Dhanuraj, a mobility expert and founder of an Indian think tank, Centre for Public Policy Research, told Rest of World. “This can lead to changes in the policy regulations and reforms in the Indian transport sector. If that happens, there will be a lot to learn from the Indian market.”

Uber leads India’s cab-hailing segment with a 50% market share. In the popular scooter and three-wheeler markets, though, the company lags local rivals like Rapido, a unicorn that controls 31% of the market. Uber’s longstanding Indian rival Ola holds 26% in the same category.

Namma Yatri, a homegrown ride-hailing company founded in 2022 that pioneered commission-free pricing, operates on a subscription model: drivers pay a fixed daily fee — varying between 10 rupees (12 cents) and 30 rupees (36 cents), depending on the city — to use its app, and they get to keep the rest of their earnings. Namma Yatri has logged nearly 75 million rides since 2022.

Shan M.S., founder of Namma Yatri, told Rest of World that driver resentment toward commission-based pricing has been deeply entrenched — and palpable — for many years.

“When we spoke to drivers [in 2022], they demanded trust and transparency in payments, feeling deceived by commission models where algorithms set rates during peak hours,” Shan told Rest of World.

Rapido, another homegrown ride-hailing service, which primarily operates as a bike taxi aggregator, completes an average of 2.5 million rides daily and serves over 31 million active users.

Uber has clocked 3 billion rides in the last 10 years in India, an average of 800,000 trips per day.

The competition in the commission-free ride-hailing industry is only increasing.

In late March, India’s home minister, Amit Shah, introduced a new ride-hailing initiative called Sahkar Taxi in Parliament. Shah said the government-run service would be “just like Uber and Ola” in its reach and market size but would operate on a commission-free model.

The Sahkar Taxi initiative is part of a government effort to curb the dominance of large global tech platforms. It complements another public technology initiative — the Open Network for Digital Commerce (ONDC), launched in 2022. ONDC promotes a decentralized, open-source online commerce model that allows buyers and sellers to transact across different platforms without being tied to a specific app or website. 

Namma Yatri became the first ride-hailing platform to join ONDC in March 2023. A year later, Uber signed a pact with ONDC to explore potential integration, which hasn’t happened yet. 

“Uber has invested heavily in their proprietary technology, and they may not easily give up their edge by joining the ONDC platform,” Dhanuraj said. “ONDC is a decentralized model, and Uber is a centralized model. Uber is also facing many challenges in many states, and I don’t think Uber wants to get exposed to government oversight.” 

Kishan Verma, who leads an auto drivers’ union in New Delhi, told Rest of World that the way forward for the government is to set fare guidelines for ride-hailing apps. Though he’s not fully aware of ONDC, he’s advocating for a similar intervention.

“This is a welcome change from Uber — it was much needed — though we do not trust any of these aggregators, as once we get hooked, they will spike their rates,” Verma said.

Shaik Salauddin, national general secretary of the Indian Federation of App-Based Transport Workers, also sees zero-commission platforms as temporary bait.

“Some of these companies began with free subscriptions,” he said, “but once they attracted drivers, they started hiking fees.” In Hyderabad, Rapido now charges 29 rupees (35 cents) a day for three-wheeler taxi drivers, while Uber, still new to the model, is offering discounts and charging just nine rupees (11 cents), he said.

These shifts could dent Uber’s short-term revenue, Shreya Gadepalli, a mobility expert and former South Asia director at the New York–based Institute for Transportation and Development Policy, told Rest of World.

“But we’ll have to see how the subscription model plays out,” Gadepalli said. “The SaaS approach removes the uncertainty of fluctuating commission-based earnings.” 

Mohammad Aslam, an auto-rickshaw driver with Uber in New Delhi, said the change has brought relief. “The old system of paying a commission on every ride forced many of us to go offline and look for passengers on our own,” he said. “We don’t have to do that anymore.”

Aslam used to pay Uber 19 rupees (22 cents) per ride — nearly 30% of his daily income. Under the new subscription model, his flat fee is under 5% of what he earns in a day — a savings that, he says, covers his daily groceries.

Sachin Sachdev, an Uber Premier cab driver in Delhi, said Uber’s response to challengers like Rapido and Namma Yatri has been to slash fares across categories — from its Premier cars to the budget segment, UberGo. But the company still charges a 25% commission per ride for cabs, making the fare cuts harder to bear.

“Uber knows slashing prices is the only way to keep customers hooked,” he said. “It slows down Rapido and others. Drivers feel compelled to come back to Uber — that’s still where the ride demand is.”