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Last Updated : Nov 15, 2019 01:48 PM IST | Source: Moneycontrol.com

Shared Mobility | Uber's single largest investment in India is just a step towards its bigger dream

After exiting China, Uber’s natural bet is on India. Besides investing in the core raid-hailing business, Uber is putting fresh money in new businesses.

Ride-hailing firm Uber has just pumped in Rs 1,767 crore, or around $250 million, in its Indian arm. This is the single largest investment by the San Francisco-headquartered company that has invested close to $2 billion in India since it entered the country in August 2013.

Uber is reportedly going to spend the money for both its ride-hailing business that directly competes with Ola, and the food delivery arm Uber Eats which competes with Swiggy and Zomato.

The fact that part of Uber’s fresh investments in India will go to Uber Eats shows that the ride-sharing firm has failed to get a buyer for its food delivery business. In February, Uber was reportedly selling its most recent success in India Uber Eats to Swiggy and Amazon. That was before Uber hit public markets to raise money through a new share sale.

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For the time being, Uber will continue to burn cash to keep Uber Eats floating. This investment comes at a time when Zomato has decided to bring down its regular cash burn and focus on profitability and Ola has suspended the food delivery business that it entered after acquiring FoodPanda in December 2017. Ola, though, is still planning to start in-house food brands.

Clearly, food delivery business owners are getting cautious. But Uber's fresh fund infusion into Uber Eats may lead to Zomato looking for fresh funds.

The latest round of investment by Uber in India is also timed with rival Ola’s $200-million fund raise from technology firm Microsoft. Both Uber and Ola have been looking for new avenues as growth in the core ride-sharing business has slowed. Besides its focus on electric mobility, Ola has just launched the self-drive car rental business with Ola Drive that would have a fleet of 20,000 cars by 2020. The new business, which is going to compete against Ravv, Zoomcar and Carzonrent, among others, will have investments of $500 million in the next couple of years.

Uber isn't sitting idle as well. Last month, its global CEO Dara Khosrowshahi, during his visit to India, announced a partnership with Delhi Metro Rail Corporation to show its users metro rail fares and schedules on the Uber App. Besides, the company will be starting inter-city bus services that would compete with likes of MakeMyTrip and RedBus. To add to that, Uber will be launching Uber Money, which will show real-time earnings for its drivers, and enable users to pay through this mechanism, next year. Other financial products like credit and debit cards will follow. It has also announced plans to double headcount at research and development centres in India to 1,000.

Clearly, this will not be Uber's last big investment in India. In the most likely scenario, this is just the start for Uber's big-ticket investments in a market, that its global CEO Khosrowshahi had in February, termed as the laboratory for the next six billion consumers that the San Francisco-headquartered company aims to have through different services.

India is important for Uber because of the fact that Uber does not have many choices. It has, in past couple of years, exited eight markets, including China. With China gone, Uber only has India that can give it scale with 1.3 billion people. Even though most of India is yet to be covered by Uber, the country has emerged as the third largest market after US and Brazil. India already accounts for around 11 percent of its total number of trips.

Khosrowshahi did not term India as its "healthiest market" just like that. His hopes are high. In 10 years from now, Uber aims to multiply number of trips in India by 5-10 times.

That, to be straight, won't be easy. When bets are high, investment -- in large chunks and in different tranches -- is a no brainer.

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First Published on Nov 15, 2019 12:37 pm
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