Ola measures Indian credentials on Alibaba’s Chinese scale

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The largest taxi aggregator in the country, Ola, took the debate of “local versus foreign” against global rival Uber by citing Alibaba, which is called a Chinese company as it is run by Chinese entrepreneur Jack Ma, despite majority of its shares held by global investors.

At the same time, it repeated its charge that Uber was violating local laws as a business strategy, not just in India, but globally.

“Aren’t the cutting-edge technology solutions, high-value jobs and Internet ecosystem that Alibaba has built, invaluable assets for China?” Ola’s first employee and its Chief Operating Officer Pranay Jivrajka wrote in a blog post on Thursday.
“It is a shame that our competition has to fan a debate of nationalism to hide their identity of being a multi-national, with serial violations of law as a business strategy, not just in India, but globally.”

Ola was founded by Bhavish Agarwal in 2011, before he moved base of operations to Bengaluru

Jivrajka wrote that the debate is not about foreign versus local but who is respectful of the local laws and who is disrespectful.

He accused Uber of violating local transport rules by allowing riders to ferry passengers on two wheelers in Gurgaon and private cars for its Uber Commute across India, violating transport rules.

India’s transport rules mandate that vehicles that ferry passengers for a fee should have a yellow number plate, pay higher taxes and insurance premium and are subject to annual fitness certification. The driver who ferries passengers must have a commercial licence.

Business Standard reached out to Uber for comment, but did not get a response.

Uber, in a blog post on Tuesday, had countered Ola’s earlier charge that it was a foreign company looking at profits by saying that it had hyper-local teams that solve hyper-local issues in India and maintained that it had deepest respect for laws of India. It has called for framing regulations that apply equally to all.

Uber has taken the Karnataka government to court over new rules that mandate licences for taxi aggregators, installing physical meters, emergency buttons and GPS devices, besides capping fares by ending surge pricing. Ola on Monday filed an affidavit in the Karnataka High Court saying that Uber’s petition is motivated in an “attempt to bypass the laws of the land by foreign companies who run their operations in this country for profit without due regard for the applicable laws”.

Ola and Uber, both backed by private equity firms are fighting a bitter battle to take a lead in India’s on demand taxi market. Their business model works on the network effect. The more number of drivers on their platforms get them more number of riders creating a virtuous cycle to build strong and profitable business. To achieve this, both firms are competing for the same market share by incentivising drivers and offering discounts to users

Uber last year committed to invest $1 billion in India to capture the market. Last month, Uber said it would spend a substantial part of the $3.5 billion it raised from Saudi Arabia’s public investment fund in India. Meanwhile, Ola, which is in talks to raise fresh funds of $1 billion, has raised over $1.2 billion from investors such as Softbank so far.

Claiming that it was working with the government as a partner to build the ecosystem, Jivrajka said it had lost market share to Uber because of respecting the law of the land by following rules.