BENGALURU (reuters) – The south Indian state of Karnataka held the door open on Saturday to talks with local ride-hailing service Ola to avoid a ban, that could help rival Uber build market share.
FILE PHOTO: A worker speaks on his phone as he sits at the reception desk in the office of the Ola with the taxi in Gurugram, formerly known as Gurgaon, on the outskirts of New Delhi, India, April 20, 2016. REUTERS/Anindito Mukherjee/File Photo
Karnataka earlier this week issued a notice to suspend Ola ‘s license for six months for violating the government rules by the run of motorcycle taxis that are not allowed for safety reasons.
Statement of capital and technology hub Bengaluru is between Ola’s top three markets in India.
V. P. Ikkeri, state commissioner for transport and road safety, told reporters the department had seized and issued fines for approximately 258 cycling during a probe after complaints.
Ola’s permit, obtained in 2017 and are valid until 2021, can be performed three-and four-wheeler taxis in the indian state of Karnataka. The company, backed by SoftBank Group Corp and Tencent Holdings Ltd, has until Monday to respond to the suspension notice.
“It is a temporary interruption, and if they give us a satisfactory answer, then we will not need to make the implementation of the ban,” Ikkeri said, adding that Ola would be faced with financial penalties.
Ola not immediately respond to a request for comment.
It could lose from bad to Uber if pushed out of the market for a longer period of time.
“If Uber comes up with a strategy to lock in some of the drivers or customers with more incentives, it will be hard for Ola to make a comeback,” said Neil Shah, partner and research director at Counterpoint Research.
“Starting from the top three (Indian) markets contribute to about 35-40 percent of the Ola’s revenues, if the ban is complied with, we can look at a 5-10 percent revenue hit to the company.”
On Friday, the company said it was evaluating all options to find an “amicable settlement” and was working closely with the authorities.
Ikkeri also said that the department had sent a notice about penalties to the last known address of Rapido, another motorcycle taxi operators in Bengaluru. Rapido could not be reached for comment despite several attempts by Reuters.
Reporting Chandini Monnappa and Chris Thomas in Bengaluru; Editing by Martin Howell and Andrew Cawthorne