Indian govt plans to convert private cars into shared taxis

Acknowledging the continuously rising menace of pollution and traffic congestions, Indian government is examining the use of private vehicles as shared taxis and reduce car ownership in major cities, according to Reuters.

The report cited the government official who said that the Indian government wants to reduce private car ownership.

The government think-tank Niti Aayog has partnered with ride-sharing firm Uber Technologies and other companies to assess the economic and environmental impact of using private cars as taxis. The three-month study will look at the safety, regulatory, tax and insurance implications.

“While the study is in its early days, the broad idea is to set up a clear and reasonable regulatory framework for ride-sharing so it allows companies to operate in India without ambiguity,” another source involved in the process told Reuters.

Talking to the agency, an Uber spokesperson said sharing private vehicles can help cut congestion and ensure more efficient use of cars. "We are engaging with a range of stakeholders in India about the best way to realize this vision," he said.

Uber and Ola have built their taxi "fleets" in India by offering incentives such as free smartphones and cash bonuses to drivers, but both are now cutting back on these in an attempt to be profitable.

Allowing the use of private cars as taxis would improve the supply of vehicles at a low cost, say analysts.

However, there can be many implications of this government plan.

Increasing the availability of cars that can be used as cabs would be welcome news for Uber and its SoftBank-backed local rival Ola, although it could heighten tensions with taxi operators that typically pay higher fees for commercial licences while facing more rigorous vehicle testing.

Besides, the move can also impact the car sales in the country, where the ownership ratio is already low compared with other countries. There are fewer than 20 cars for every 1,000 people in India.

Maruti Suzuki, Hyundai Motor and Tata Motors are among the top-selling carmakers in the country, which is forecast to be the world's third-largest car market by 2020.