India’s urban transport sector has seen tremendous change in the last 15 years. This series examines the evolution of for-hire vehicles, the regulatory response to it and its place in the mobility network of the future.

Indian cities are growing at an unprecedented rate and an accompanying surge in the demand for transport services is inevitable. Forecasts suggest that by 2031, urban Indians will take nearly half a billion trips a day. Today, most of these journeys are completed on foot or bicycle, but as cities continue to sprawl and the distance traveled increases (from 11 kilometers on average in 2011 to 15 kilometers by 2031), the need for motorized trips will grow.

In cities like Delhi, Bengaluru and Mumbai, public transit makes up the largest share of motorized trips, but for-hire-vehicles, such as city taxis and auto-rickshaws, have long played a significant role as well. An integral part of many Indian cities, they often fill the gap between public and private transport. The recent growth of large, privately run fleets and the development of on-demand technology have increased the options available to commuters, while also changing the way these services are accessed.

This raises important questions about the future of the sector. Will mobility in Indian cities be categorized by separate public and private options, or will there be varying shades of shared options? Can innovations reduce travel time and meet rising demand, while also reducing emissions?

A Changing Market

In India, the for-hire vehicle (FHV) sector has been dominated by city taxis and auto-rickshaws for decades. Every day, millions of people employ their services in a range of contexts, from “last-mile” connectivity along public transit routes, to a cheaper alternative to owning a private vehicle, to simply providing more reliable service than public transit. According to the Comprehensive Mobility Plan for Greater Mumbai, FHVs accounted for 1.4 million trips a day or 16 percent of the city’s motorized mode share in 2015.

But over the last 15 years, private sector investments, advancements in technology and the increasing use of mobile phones have transformed how people interact with FHVs. Now, urban commuters may choose to hail a taxi or auto-rickshaw the old-fashioned way, but they can also call, text, WhatsApp or e-hail them, or even request just a seat in a shared taxi or bus.

The trajectory of the FHV market in India can be broken into four phases, which will be explored in greater detail over the course of this series.

 

Phase 1: The first phase of FHVs in India, beginning in 1959, is iconic with its black and yellow taxis and auto-rickshaws. Similar to the yellow medallion taxis of New York and the tuk-tuks of Thailand, these ecosystems are largely informal and unorganized but continue to this day. Though many regard city taxis and auto-rickshaws as dependable and affordable, they are also notorious for refusing rides, bargaining over fares and providing poor income to drivers.

Phase 2:  Recognizing the opportunity for formalized FHV services, several fleet management companies started emerging at the turn of the century to better organize drivers. They allowed commuters to pre-book a vehicle via phone or website. A vehicle would then be dispatched from a central base or call center. Known in India as the radio taxi or fleet taxi model, this second phase systematized a relatively unorganized sector and brought in measures of quality control.

Phase 3: Further improvements in mobile technology ushered in the “aggregator” or “on-demand” phase. Companies no longer had to own a fleet, and factors such as customer discovery, driver routing and dispatch became simpler and more automated. Companies simply connected drivers to commuters via smart phones. Aggregator services are also expanding to include bigger vehicles, such as buses, and using crowdsourcing technology to develop new routes that better meet customer demand.

Phase 4: We are only beginning to see the fourth phase, of mobility as a service with more seamless, multi-modal commuting experiences. In cities such as Helsinki, Paris, Las Vegas and Singapore, access to transit is becoming a commodity. The vision is of a digital platform on which you can buy units of mobility across all modes of transport, from public to shared to private, instead of paying for individual bus tickets, cab rides or buying a car. In India, we are seeing the initial building blocks of such an ecosystem being put into place. A plethora of apps are already in the market, leveraging crowdsourcing and open data to provide real-time information, allow for cashless transactions and enable commuters to choose from a range of options.

The Future of Urban Mobility in India?

The connected vision of multi-modal transit in Indian cities, where for-hire vehicles blend seamlessly with public transit options, is still in its infancy. Most mass transit options such as city buses and suburban rail networks continue to be managed by public agencies. Private players have tried to step up and plug service gaps, but they have been thwarted by regulatory barriers.

The future depends on smart regulation and nuanced public policy that can balance a legitimate concern for the public good, commuter safety and system efficiency, with the innovations and investment that the private sector can provide.

Jyot Chadha is the Director for Urban Innovation at WRI India Sustainable Cities.

Ojas Shetty is a Research Consultant with the Urban Innovation team at WRI India Sustainable Cities.