India's online ride-hailing sector has emerged as a crucial pillar of urban mobility, generating significant economic value and employment opportunities. The sector serves a substantial and growing user base, projected to reach 38.06 crore by 2029. Despite its transformative impact, the current ride-hailing ecosystem presents challenges for drivers and customers. Drivers face low earnings, high platform commissions, and the absence of social security, while customers encounter issues like limitations around public transport integration, underserved tier-2, 3 and 4 cities, cancellations, and inconsistent service quality. These concerns underscore the need for a more equitable, inclusive, and innovative approach to ride-hailing services in India.
This paper describes ways to address that: open network models and zero-commission SaaS models. We also discuss critical policy interventions like rationalised GST structures in this regard. Open network models, exemplified by ONDC, foster interoperability, competition, and unbundling, creating a decentralised ecosystem where drivers and passengers can interact seamlessly across platforms. These models empower small businesses and promote digital inclusion by lowering costs and enabling innovation. Zero-commission SaaS platforms, which have emerged as a preferred choice of current Network Participants, ensure drivers retain 100% of their earnings, alleviating financial stress and fostering greater autonomy. Together, these solutions align with India’s broader goals of equitable growth,digital inclusion, and sustainable mobility under the Government's Vision of Viksit Bharat and Digital India.
To further the cause of inclusive digitalisation, we recommend a GST rationalisation on ride fares for open network zero-commission SaaS online ride-hailing and benefits under initiatives like Startup India. Creative ownership structures, such as cooperative models, and public-private partnerships can further drive adoption. Educational campaigns can raise awareness about the advantages of these platforms, enhancing stakeholder engagement. By enabling open network zero-commission SaaS platforms, India can reshape its mobility sector to ensure fairness for drivers, affordability for customers, and a thriving, inclusive digital ecosystem.
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