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Indian and Chinese govts try to get a grip on taxi apps

10/16/2015| 3:26:58 PM|

Moves by the Chinese and Indian governments to bring order to the sector will be welcomed by consumers. The impact on the businesses and investors is less clear.

Tnooz, Martin Cowen - Uber has welcomed the first concrete move by the Indian government to regulate ride-hailing technology platforms.

Uber faces strong competition from homegrown services like India's Ola

India’s Ministry of Road Transport and Highways (MoRT&H) has issued an “advisory” note which will serve as a guideline for the state transport departments.

In a statement Amit Jain, president of Uber India, said:

“The guidelines are a significant step in the right direction. They rightfully distinguish between taxi operators and technology platforms, and lay down sector specific regulations for our industry.”

However, coverage of the move in India suggests that the guidelines are not binding on the state departments who are responsible for licensing the aggregators. Uber’s statement almost says as much, talking in terms of “[working] with the state governments to adopt reasonable regulatory provisions in the spirit of the central guidelines.”

At the same time, it appears as if the Chinese government has also issued some draft regulations about the ride-hailing taxi-aggregation sector. Uber is facing an uphill struggle to gain traction in China, where Didi Kuaidi is the dominant brand in terms of market share.

Reports say the draft regulations will, among other things, require businesses to have their servers in China and that the price that the businesses charge customers can set by the market or the government.

Uber is no stranger to regulatory issues in almost all of the markets it operates in, although the same applies to all ride-hailing businesses. It is a bit odd that such a huge global industry appears to be operating in a legal vacuum, not that this is deterring investors.

The moves by the Chinese and Indian governments to bring some order to the sector will be welcomed by billions of consumers. The impact on the businesses and the aforementioned investors is less clear cut.

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TAGS: Ola | Didi Kuaidi | India | China | Uber
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