Uber says profitability in India biz not too far away

“It’s a steady march,” said Pradeep Parameswaran, Uber’s regional general manager for the Asia-Pacific region. “Every year, our unit economics is getting better than the previous year. So we don’t have an exact timeline for being profitable in India. But I’d say it’s not that far away either.”

At a media interaction in Sydney last week, Parameswaran said that pre-covid, the category of people who could afford Uber’s services was growing at 15-20% in India.

According to Parameswaran, ride-hailing penetration is 0.3% in India, which is one-tenth of the penetration numbers in markets such as the US.

Parameswaran also dismissed reports about possibly exiting India or merging with competitor Ola.

“Frankly, we have a runway for the next decade-plus (with respect to demand),” he said. “Our unit economics has improved dramatically in the last three-four years. I feel very good about where we are on that journey, and over time, I have no doubt that India will be a high-growth market, which will also be profitable,” he said. “But right now, we are in the investment phase, like inter-city, high capacity vehicles (HCV); we have to spend on marketing, technology, and customer care and more,” he added.

The June quarter was a milestone for Uber worldwide when it reported its first-ever cash-flow positive quarter since it was founded 13 years ago. The company reported a loss of $2.6 billion for the second quarter (of which it attributed $1.7 billion to investments and revaluation of stakes in Aurora, Grab and Zomato) and posted $382 million in free cash flow. Total revenue for the June quarter stood at $8.07 billion. Uber does not provide separate country figures.

The company sees India as a long-term investment and is looking to push two- and three-wheeler products in the country. According to a report by Public First commissioned by Uber, earnings for driver-partners and indirect effects like car maintenance created economic value worth ₹44,600 crore in India in 2021. The report also estimated that Uber created a consumer surplus of ₹1.5 trillion in India last year.

According to Parameswaran, expanding the modes of transport and improving service quality, which has declined due to a shortage of drivers and high-fuel costs post-pandemic, are among the chief concerns for the company right now. Uber Moto and Uber Auto, which offer rides on motorbikes and auto-rickshaws, are among the fastest growing segments for Uber in India. However, the company said that expanding to the two markets has been tough.

“On three-wheelers, some states are outright saying that your licence doesn’t apply. So, we’re stuck in bureaucratic knots, which are inefficient,” Mike Orgill, senior director, public policy and government relations, APAC at Uber, said. He added that safety concerns and the issue of “can you transport somebody on something that’s not a commercial vehicle” had affected the Moto business.

Orgill also said that Uber has “encouraged” the government to open up the ride-hailing space to everyone so that anyone can drive cars on platforms like Uber without commercial licences as long as they meet the safety standards and pay appropriate taxes. He added that the rules and regulations India applies to two- and three-wheelers could set an example to countries in Latin America, the Middle East, South America and other places where such transport is common. India’s Code on Social Security, 2020 also sets it ahead of others in terms of creating labour laws for gig workers, according to Uber.

“We want outcome-focused regulation so that if we start to see better ways to do things with technology, we’re happy for the government to take a look at it and figure out if it’s good or not,” Orgill said. “What we’re trying to get to is, say what is it that you’re really trying to get to in terms of safety, customer protection, driver welfare outcomes, and how do we set those as goals versus being prescriptive in terms of how you do it. Because once you’re prescriptive, we’re locked into doing it as prescribed, and the government is running the business when we feel like there’s a technology we could be taking advantage of,” he said.

Lastly, the company said it wants to deploy more electric vehicles (EVs) in India in the coming years. While it does not have any electric vehicles in the country, Uber has pledged to have an all-electric fleet globally by 2040.

The writer was in Sydney, Australia at the invitation of Uber.

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