Ola & Uber Shift Gears: Subscription Plans for Auto Drivers Shake Up the Market

Ride-hailing giants Ola and Uber are making a strategic shift in India, adopting a subscription-based model for auto-rickshaw drivers. This move mirrors the approach of competitors like Namma Yatri and Rapido, potentially impacting both the companies' revenue model and the GST landscape.

• Ola and Uber introduce subscription plans for auto drivers in key Indian cities.
• Drivers pay a fixed daily/weekly fee for unlimited rides, potentially bypassing 5% GST.
• This model departs from the traditional commission-based system.
• Ola and Uber act as platforms, not setting fares or facilitating online payments.

Potential Benefits for Ola & Uber:

• Subscription fees offer a guaranteed revenue stream, potentially mitigating dependence on individual ride commissions.

• The model could be classified as a SaaS offering, impacting tax implications. (Expert opinions vary on potential GST implications.)

Challenges and Considerations:

• Unclear if the September 2023 exemption for Namma Yatri extends to Ola and Uber's model, leading to potential tax disputes.
• The lack of online payments and fare control might require adjustments for drivers and customers.

• This development coincides with Ola Electric's plans to launch its electric auto-rickshaw, "Raahi," directly targeting consumers.
• Ola's parent company (ANI Technologies) narrowed its losses in FY23, while Uber India's losses widened.

Looking Forward:

The adoption of subscription plans by Ola and Uber represents a significant shift in the Indian ride-hailing market. It remains to be seen how this model impacts their revenue, navigates the tax landscape, and ultimately fares with drivers and customers. The launch of Ola Electric's "Raahi" further intensifies the competition in the auto-rickshaw segment.