BENGALURU: Former chief minister of Karnataka HD Kumaraswamy has turned angel investor for a mobile-based cab hailing venture in the city.
Come Ugadi, Bengaluru could see the new cab aggregator, HDK Cabs, rivalling Ola and Uber. The app comes in the aftermath of prolonged protests by disgruntled drivers associated with Ola and Uber.
Apparently, HDK Cabs plans to charge a fixed fare through day and night. “Both Ola and Uber cheat people in the name of surge pricing and other hidden charges.
Although we have not fixed the fare yet, there is a plan to charge either Rs 10 or Rs 12 per km for mini cabs, and Rs 12-14 for prime cabs,” said Tanveer Pasha, who led the cab drivers’ protests in February.
Kumaraswamy told ET the app is not being developed for commercial reasons. “Drivers were helpless when the state government showed no interest to resolve the issue. It was at this time they felt the need to start their own venture. Launching a new app similar to Ola and Uber was their project, which is now in final stages,” he added.
Kumaraswamy openly supported the protesting drivers throughout their agitation in February. ET had reported that the drivers were eager to start their own mobile-based cab service with help of film-producerturned-JD(S) politician.
The JD(S) finds a chunk of its support in youth working as taxi drivers in the city. Kumaraswamy said he would make an initial investment of Rs 2-3 crore, which could go up to Rs 50 crore in the next two years.
“The project will be ready in a month. Already, many private app developers have submitted proposals. Besides, about 15,000 drivers have shown interest in joining the platform. The number could go up to 40,000 once the project takes off,” he said. Tanveer Pasha said a core committee of drivers has been formed to oversee office infrastructure, administration and development of the new venture.
“HD Kumaraswamy is making initial investment. The cab driver will have to pay a commission of 5% from the fare-revenue to the firm, while Ola and Uber takes about 30% of the commission. Drivers will not have to do a minimum number of trips a day, as stipulated by Ola and Uber, for incentives. Besides, the company will bear expenses on cab maintenance, insurance, and annual tax,” he said. Profits would go to a drivers’ welfare fund, he added.
While Ola did not respond, Uber said it charges commission of 25%, of which 5% goes to the government as service tax.
HE Somashekar, president of Ola and Uber Chalakara Sene, said HDK cabs will be popular. “It is drivers who built Ola and Uber working day and night. We will work harder for our firm.” Transport expert Ashwin Mahesh said the venture would benefit the consumer.
The drivers will, however, have to take into consideration financial arrangements, technology development and business relations to compete with well established firms. “It involves risk as there are only a few who dominate in the digital market,” he said.