RAPIDO'S REMARKABLE EXPANSION IS IN DANGER
The destabilisation of policy in three states is having a detrimental impact on the largest motorcycle
manufacturer in India. A taxi aggregator refers to a platform that connects passengers with multiple
taxi service providers through a single interface.
Incidents:
In the month of March, an individual operating an autorickshaw in Bengaluru intercepted a bike taxi
driver who was operating a red scooter within the confines of the Indiranagar locality of the city.
The video that has gained widespread attention depicts an autorickshaw driver attired in a khaki
uniform, who is heard and observed making a statement regarding the unlawful operations of the
Rapido enterprise. The individual in question has arrived from a different state and exhibits a sense
of entitlement while operating a vehicle. According to the speaker, the individual in question arrived
to collect a female companion despite the presence of a white board bearing his vehicle's
registration information.
The subsequent footage depicts the automobile operator repeatedly striking the helmet of the
passenger seated behind them against the pavement. The driver of the bicycle taxi, who was
subjected to intimidation, remains silent while seated on his motorised scooter.
After a period of two weeks, the Bengaluru Auto Driver's Union Federation organised a
demonstration against Rapido and other bike taxi companies that operate through mobile
applications. The leader of the union, Raghu Gowda, urged operators of autorickshaws to incinerate
all motorbike taxis present on the streets in a video posted on Facebook.
On the 3rd of April, a video surfaced depicting an instance in which an autorickshaw driver in the
Koyambedu region of Chennai engaged in an act of aggression towards and inflicted damage upon
the motorcycles utilised by Rapido and Ola. The driver attributed his loss of business to the
companies, accusing them of theft.
Bike taxi drivers are experiencing a growing number of instances of abuse, which are exemplified by
the cases. In certain instances, auto-rickshaw operators engage in the act of booking rides with the
intention of ambushing bike taxi drivers upon their arrival at the designated location, subjecting
them to harassment.
Ola and Uber, prominent players in the field of cab aggregation, have diversified their services to
include bike taxis. However, Rapido has emerged as the dominant player in this segment, exhibiting
remarkable growth. The brand recognition of televised advertisements has been observed to
increase during Indian Premier League matches. The motorcycle taxi service is being perceived as the
most formidable rival by autorickshaw unions, who are directing their anger primarily towards the
drivers employed by the company. The labour unions in various cities across India, including
Bengaluru, Chennai, Delhi, Mumbai, Pune, and Nashik, express concern that Rapido, a ride-hailing
platform that has been in operation for seven years, is encroaching upon their means of subsistence.
According to Shashank Rao, the president of the Mumbai Autorickshawmen-Taximen's Union, the
introduction of bike taxis in Maharashtra will result in the displacement of approximately 14 lakh
drivers and 10 lakh autos from the market.
The occurrence of resistance is not unexpected for Rapido. Ten years ago, labour unions responded
in a comparable manner to the emergence of Ola and Uber in the taxi industry. In the end, the
protest subsided. Bike taxis elicit a heightened sense of apprehension due to their comparatively
lower fares vis-à-vis those charged by auto-rickshaws. According to a preliminary analysis on ridehailing applications, the cost of a 10km journey on a bicycle taxi is potentially 48% less expensive
than that of an autorickshaw and approximately 60% less expensive than that of a cab.
Currently, the operation of bike taxis has been temporarily suspended in the states of Maharashtra
and Delhi, as the authorities are in the process of formulating a policy pertaining to the same. The
state of Karnataka has deemed it to be illegal. In contrast, the southern region of the country exhibits
a permissive stance towards authorizations for utilising electric motorcycles as a means of public
transportation. It is probable that Delhi will also follow suit.
Company:
Rapido is an Indian motorcycle taxi aggregator that is operated by Roppen Transportation Services
Pvt Ltd.
In 2015, Rapido was established by Aravind Sanka, Pavan Guntupalli, and Rishikesh SR as cofounders. The individuals in question initiated the development of a compact truck aggregation
platform, Karrier, but subsequently altered their business strategy to focus on two-wheeled vehicles.
The concept was not particularly innovative.
According to Guntupalli, during the period of 2014-15, when ride-sharing was gaining immense
popularity across the nation, it became apparent that a significant portion of the Indian population
was still grappling with unresolved transportation issues. The ride-sharing revolution was not
prevalent beyond the major cities such as Bengaluru and Delhi.
The affordable nature of owning and maintaining a two-wheeler, in conjunction with its widespread
usage (with half of India's households possessing a two-wheeler compared to only 8% owning a car),
facilitated the development of a model that was light on assets. Additionally, this model effectively
addressed the issue of traffic congestion in major urban centres. Bike taxis have become increasingly
popular in smaller cities and towns where inadequate public transportation infrastructure is a
prevalent concern.
In 2016, the startup Rapido experienced a significant boost when Pawan Munjal, the chairman of
Hero MotoCorp, made an investment in the company. Munjal provided the founders with a valuable
piece of advice, which is to refrain from postponing their entry into cities categorised as tier II and III.
Rapido experienced significant growth between 2016 and 2018, expanding from a limited number of
cities and approximately 1,000 daily rides to a presence in 60 cities and a daily ride count of 10,000.
The year 2019 marked a significant turning point. With the aid of two favourable factors, namely the
increased affordability of mobile data and the escalated cost of shared cab services, Rapido has
achieved an average of 300,000 rides per day. At the onset of the pandemic in February 2020, the
startup had already achieved a daily ride count of 400,000.
Rapido, in addition, expanded its operations to include the delivery sector and notably, the
aggregation of autorickshaws.
The momentum of the business was temporarily halted by the pandemic, however, with the
reopening of offices in 2021, it experienced a swift recovery. At present, the organisation is recording
one million rides on a daily basis across various sectors. Bicycle taxis currently account for more than
75% of the total business.
What is the earning potential for drivers operating on the platform?
Approximately 70 units per hour. On average, a significant number of part-time drivers earn a
monthly income of ₹6,000. Full-time employees, who work for 10-12 hours per day, can earn a
maximum of ₹20,000 per month. On the contrary, it has been observed that autorickshaw drivers in
metropolitan areas earn an average monthly income of ₹18,000. As previously elucidated, the
individual's income may be negatively impacted if Rapido's offerings experience increased popularity
and are legitimised.
Sanka minimised the impact of reduced earnings on autorickshaw drivers. According to our research,
the level of disruption experienced by individuals in terms of their earnings and livelihood does not
exceed 15-16%. Bicycle taxis are primarily utilised for a specific purpose, namely, individual
commuting with minimal baggage. According to the speaker, the mean distance covered by an
autorickshaw during trips is 1.7 times greater than that of a bike.
According to Rapido, the current number of drivers on its platform is 750,000, with the majority
being individuals who work part-time.
Rapido experiences losses, much like many other firms. It had 158 crore in revenue but a 439 crore
loss in 2021–22. The company's ongoing policy negotiations with state governments and
autorickshaw unions are proving to be an expensive diversion at a time when it needs to build up its
operations and focus on increasing its bottom line.