Banning of Uber in Delhi: Source Of Discouragement For Startups ?

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Update: Uber is acting as the victim and holding the government of India responsible for the Friday night incident. As Home Minister Rajnath Singh informs the Rajya Sabha, the government has banned all the app-based cab services along with Uber, not only within the boundaries of Delhi but this should also be followed across the country.

The Uber cab service, also known as the Radio Taxi service, which has its headquarter in San Francisco and operates in more than 35 cities worldwide, has very recently been introduced to the roads of India. It is a cab service which has an app through which one can ask for a cab from one’s current location. These cab drivers are provided with an iPhone which monitors the route of the cab as well as the distance traveled and accordingly, the fare is deducted from the passenger’s credit card. Very soon it became one of the most convenient and affordable way for conveyance for the common people. Right when it was attaining its popularity among the mass, the name got tangled to a horrific controversy which led to its decline instantly.

Right when it was attaining its popularity among the mass, the name got tangled to a horrific controversy which led to its decline instantly.On the 5th of December 2014, a Uber cab driver is accused of raping a 25-year-old woman, when she boarded the cab on her way back home at night. Finally, after she lodged her complaint against this man, he was caught by the police in Mathura city which is almost 161 kilometers from the Indian capital. As the incident was further investigated and a thorough background check of the cab driver was undertaken, it was shocking to find that this 32 years old man, named Shiv Kumar Yadav, had a criminal record of sexually assaulting a woman back in 2011. He was imprisoned for seven months and then he was out on bail. Such negligence on the part of Uber had not taken place for the first time. Towards the end of last year, a man who boarded a Uber cab was verbally abused and physically assaulted by the cab driver.

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Following the incident, Uber is has come under the sharp criticism from people and government authorities, and this has resulted in temporary suspension of Uber services in Delhi. In fact, the sensitiveness of the matter is scaled big and governments in other states where Uber is currently operating are also considering to take action against Uber. But the government’s stern action against Uber has triggered a debate that leads to questions like:

– Did government acted in a panic mode as it didn’t wait to dig the matter deeper to understand who all are the real culprits behind such devastated act ?

– Government decision to ban one of the most promising and fastest growing startups doesn’t fall in line with the earlier similar incidents.

– Is the move shows immaturity and negligence from the government towards handling new ideas and their formation?

and the most important..

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–  Will this send discouraging signs to global startups community who are looking to India as the one of the most favorite destination to expand its services and offerings?

Uber growth rate to be affected along with that of the market

Uber is valued worth $40 billion after the recent round of funding. It operates in more than 200 cities all over the world now. Its monthly revenue is hiked by 18% every month. In the last year, the number of its employees raised from 75 to 300 globally. In India, within a year, Uber has built a market in 10 cities opening job opportunities all over the country. But this sudden drastic decision of banning Uber, in a day, by the Indian government has hampered the reputation of India in the global market. As a result, most of the foreign companies, especially the startups that are looking for new markets, will face a dilemma before investing in India, even though India has one of the most promising markets for all mobile and internet based startups.

Does the root cause match with the countermeasures taken?

Looking at the entire scenario, the integrity of the government as well as that of the company could be questioned. The Uber CEO, Travis Kalanick, expressed his regrets for the incident and promised to support the victim and her family fight through this evil situation. He also commented on putting further effort along with the government to make safety measures a top priority when it came to the women in Delhi. At the same time, he also hit back blaming the system in India.

Hence, banning the company or its services wasn’t the solution to the matter. As Uber could be blamed for its inefficiency, the government could also be held responsible since, it was again Delhi where another rape incident took place. This ensured that after the 2012 gang rape incident in Delhi the government had not taken adequate measures to ensure safety for women in the capital city.  Though, the track record of the controversies Uber had been associated with were quite a lot in number, yet banning the company wasn’t the right way to deal with it. The government decided to ban it without undertaking further investigations. Remember, Uber is just a Startup. Would it be just to make an entire company pay for one rape incident in a particular city of the world, that again a city which already had earned a bad name when it came to the safety for women? Facebook Inc. (NASDAQ:FB) and Twitter Inc. (NYSE:TWTR) are flooded with mixed feedbacks on the incident. Twitter was overloaded with tweets from people where some expressed relief as Uber was banned, while the others were questioning the ban and basic human mentality along with it. Many are blaming Uber for not providing adequate training to its cab drivers before handing over the car to them and the absence of proper background checking before employing a driver. Also, some people are harboring the mishaps which were associated with Uber in the past. Special Commissioner of Delhi Transport Department, Satish Mathur accuses Uber for not following the rules and misleading its customers by offering taxis with All India permits for point-to-point ferrying customers which is not allowed in the capital city.

There are people who are blaming the government for not issuing enough awareness among the residents of Delhi, even after the December 2012 rape incident. Indian system is mostly blamed by people as it is very easy for someone in India to get misled by or misuse one’s identity. Thus, proper background check can never be ensured in a country like India, unlike USA or UK where every resident has a code for identification such as, the social security number that is used to verify a person’s background and history.

Startups derailed by demotivating government action 

This banning of Uber also sent a negative message to the rest of the world acting as a source of discouragement for the business startups all over the world. One offensive action by one man, whose name was associated with the company, made the government of a country like India deny all its hard work behind establishing the company and creating new employment opportunities to many. Uber, being a startup worth $40 billion, had been a source of encouragement for several startups around the globe as it earned its fame within a very short period of time. At the same time, on another level, it could also be a source of jealousy and hence the competitive spirits crept in. The entire 5th December incident could also be a conspiracy of the competitors of Uber. Banning of Uber would actually benefit these rival companies.

Thus, Uber earning a negative reputation is a significant matter to draw attention to. But the safety measures ensured by the government for the women in the national capital are also something that cannot be overlooked. At the same time, it is also a drastic step on the part of the government to blacklist the startup without any proper investigation and matured approach. The cab driver could have committed the same crime in some other public vehicle as well. This is extremely disheartening for the numerous startups all over the world that draw inspiration from the success Uber has attained.

Setting up business in India has never been an easy task, World bank has rated India at the 135 position in the list of Ease of Doing Business Index 2014. Now, banning a startup like Uber that has rocked the industry by reaching the mammoth valuation in no time, will definitely send a wrong message to global startups community that are looking to India to expand their operations that would create new employment opportunities for the countrymen. Besides, this may also discourage global investors, like SoftBank and Accel Partners, who have bet billions of dollars on Indian startups. With the immature decision taken by the Indian government in jiffy may hurt the India’s position at global business forum and will leave the future of such startups in lurch.

Readers’ Verdict

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3 COMMENTS

  1. Uber sh not be banned. The incident which has happened presently in Mathura….may be it is related with uber.But it happens often in our country. But it is v important to check the background of the employees.

  2. This is very harsh decision.
    The govt officials are educated persons, we all educated peoples are taught in Decision Making that we should never take harsh decision in short span of time. They could have investigated deep and found out a way out to prevent such incidents to happen again in future.
    This is certainly not a 100% correct decision by Delhi Govt.

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