Mukesh Ambani-led Reliance Jio has plans to launch an app-based taxi service as early as this year and has ordered some 600 cars to kickstart the service. The service is likely to be called Reliance Jio Cabs.
The launch of the taxi service will depend on the commercial launch of the Jio telecom service, which is currently slated for April. “The plan is to launch after April but it might take up to six months more depending how the commercial rollout pans out,” a source at Reliance Industries, which owns Reliance Jio told FactorDaily.
The company is likely to compete in the taxi service segment with aggressive pricing and has roped in consulting firm E&Y to come up with pricing strategies that align with Reliance Industries Chairman Ambani’s plans to “go all out to get market share,” said the source.
Ambani on Tuesday announced that commercial rollout of Jio’s telecom service will begin from 1 April. At a press conference in Mumbai, Ambani, the richest man in India, had said that the Jio has crossed 100 million subscribers.
Another source at Reliance Industries said that the company has ordered cars for its own fleet from makers such as Mahindra and Hyundai. “They have placed orders for nearly 600 cars,” this source said. The idea is to operate its own fleet of cars along with independent cab drivers who can attach their cars to the Reliance Jio Cabs network.
Rumours that the company is planning to take on Uber and Ola with Jio Cabs has been doing the rounds for more than a year now. A company spokesperson, however, told FactorDaily that it’s “speculation,” and refused to comment. Update: Reliance spokesperson Rohit Bansal said on Twitter on Saturday that it is “WRONG AND DENIED.”
Jio is planning to launch the services in Bangalore and Chennai first and then move on to Delhi and Mumbai, the first source said. “South India is a better market for to start. Slowly it will move on to north,” he added. The company will pursue a “mixed market strategy,” where in it not only goes after major cities but also smaller cities like Bhopal and Jaipur.
Reliance’ Jio Cabs will have an “Uber like” app and development is already underway. As per the source, the company is still exploring the payment system for drivers. It is likely to use Jio Money, its own mobile wallet.
The entry of Reliance into the telecom market, with free calling and data in India, has had major impact on the profitability and stock prices of rival telecom operators. It is also driving a wave of consolidation in the market.
Taxi companies served nearly 500 million rides in 2016, up from 130 million rides in 2015, according to a report by market research and advisory firm RedSeer in February. Some like financier SoftBank Group have predicted that Indian cab aggregator market is poised to touch $7 billion by 2020 — a market that is currently dominated by homegrown Ola and global rival Uber.
The launch of Reliance Jio Cabs comes at time when Ola and Uber face regulatory hurdles and protests by their drivers in different parts of country.
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Lead visual: Nikhil Raj Update (25 Feb 2017, 5.46 PM IST): The story has been updated with a Reliance spokesperson's response on Twitter. Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.