After a period of major regulatory strife for Uber in India, the transportation upstart continues apace with its bid to grow business in India by working in tandem with the authorities. Today Uber announced that it has signed a memorandum of understanding with the government of Tamil Nadu.
Uber says the deal will give it scope to create over 30,000 “entrepreneurial opportunities” for drivers, as well as for the pair to together develop programs to improve tech as part of the region’s economic development, specifically around smart city strategies. From what we understand, the total investment from Uber will be in the region of $25 million – $35 million and will include training programs, infrastructure builds and working on public-private partnerships around R&D.
This is the second-such agreement for Uber with a state government in India, after announcing a similar deal with the government of Hyderabad in July of this year. That included Uber investing $50 million to create a support center.
Uber has also been using the region to test out a number of other initiatives like cash payments to supplement rides paid for through the app — a smart move, considering that payment card penetration in India is significantly lower than in the developed markets where Uber operates.
“Uber is pleased to announce our landmark partnership agreement with the Government of Tamil Nadu to drive innovation, create tens of thousands of entrepreneurship opportunities, and provide safe, reliable transport options for people of this state,” said Amit Jain, President of Uber India, in a statement. “We are deeply committed to the local communities in which we operate, and look forward to leveraging our global expertise to deliver new solutions to make Chennai a city of the future.”
Signing on the government of Tamil Nadu is a big coup for Uber in its plans to grow its footprint in India — a plan to which Uber has committed to invest $1 billion in India by the first quarter of 2016. Tamil Nadu is the second-largest economy in India by overall GDP, with the sixth-highest GDP per capita. It’s also one of the most urbanized, with Chennai the biggest city in the state.
The presence of large industrial parks — Tamil Nadu has been called the “Detroit of India” — means that there is an opportunity for Uber not only to use the state for potential R&D projects but also to position itself as a company that can help improve transportation for workers in the state. That’s interesting in light of an announcement earlier this week from Uber’s biggest rival in the country Ola: the company announced that it would be starting a shuttle service aimed at commuters, a lower-cost alternative to single-party taxis that would come with in-vehicle WiFi, air-con, and entertainment to boot.
Tamil Nadu is already an important market for Uber. Chennai, along with the four other big metropolitan areas in India, makes up 80% of all of the company’s business in India today. From what we understand, the company currently serves over 200,000 rides daily in the country, but with current growth rates the projection is to hit 1 million/day by Q1 of next year.
Nevertheless, Uber today is still lagging behind Ola in terms of drivers and rides. Ola claims 250,000 cars in the market today to Uber’s 165,000. Uber says its market share in the country is over 40%. The company is now live in 22 cities in India, it’s second biggest market outside the U.S..