Not content with raising $1 billion to fund a major expansion in China, Uber has announced that it is putting aside another billion dolla...
Not content with raising $1 billion to fund a major expansion in China, Uber has announced that it is putting aside another billion dollars in resources to grow its business in India.
The U.S. company, valued at more than $40 billion based on its latest financing, is crunching through the gears in the world’s two most populous countries in response to strong competition from domestic rivals Didi Kuaidi (China) and Ola (India) — both of which count SoftBank, itself a burgeoning taxi app player, among their investors — and the opportunity to reach more people as smartphones sales continue to increase in India.
Leaked communications from Uber CEO Travis Kalanick last month revealed that the company is handling one million rides per day in China, which is expected to surpass the U.S. as its busiest market before the end of the year. India isn’t at that level yet, but Uber said this new billion dollar investment is designed to take its business there to that same one million rides per day milestone — that’s a figure that it expects to cross within the next nine months at the latest.
Uber didn’t reveal how many rides it currently processes in India, which is now its second largest market worldwide (geographically) with 18 cities covered, but the firm claimed to see “robust” 40 percent growth month-on-month.
“India is one of Uber’s big priorities, along with China and uberPOOL. We are extremely bullish on the Indian market and see tremendous potential here. This is why Uber is committing an additional $1 billion to India in the next nine months so we can expand and improve our operations, expand into newer cities, develop new products as well as payment solutions, and establish a great support network,” Uber India President Amit Jain — who took the newly created country-lead role in May — said in a statement.
The alleged rape of a passenger in New Delhi last December threw Uber’s presence in India into question, as authorities banned the app — and other ride-hailing apps — in response to the incident. In response, Uber improved its driver vetting process and introduced a range of safety measures — it has even since cozied up to some regional government organizations — but an ongoing thorn in its side is local rival Ola.
At this point, Ola’s service — which was boosted when it paid $200 million to buy smaller rival TaxiForSure — has far greater coverage across India than Uber, but that is exactly why Uber is responding with a war chest for expansion. Uber didn’t reveal its new launch plans when we asked, but you can expect it to have major aspirations, just as it does in China where it is aiming to expand from 11 to 50 cities.
Uber’s push is reminiscent of Amazon’s own foray into India, which ignited last year when the U.S. firm pledged to spend $2 billion in the country. It made that announcement just one day after local rival Flipkart revealed a $1 billion funding raise. Amazon, Flipkart and Snapdeal are the three giants duking it out for India’s online retail crown, and Ola and Uber look like continuing their fierce rivalry in a similar fashion.
We’ve posed a range of questions to Uber to lean more about its plans for India, we’ll be sharing the responses once we have them.
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