Uber is expanding its presence in India, adding 100 cities to its network, taking Uber’s total presence in the country to 225 cities. The expansion is part of Uber’s move to expand its reach beyond India’s biggest cities and make app-based mobility more accessible to smaller cities and emerging urban markets.
The decision is critical, because the mobility business in India is no longer concentrated only in Bengaluru, Delhi, Mumbai, Hyderabad, Chennai and Pune. Increasingly, smaller cities and regional centres are becoming major ride-hailing and app-based transportation hubs. Uber plans to tap into this huge appetite for mobility and would give riders digital booking, cashless payment and a better mobility experience.
Given that Uber will soon add 100 cities simultaneously to its network, its intention to add 100 cities at once is an indication of the growing importance India is becoming more and more critical for its global business.
Uber has grown from a service for large urban centres to a much bigger mobility platform for consumers in all the different types of cities. With this move, app-based transportation services for a much larger segment of the population will be accessible across the street with the expansion of their service.
As a result of the growth, customers may have more Uber services available to travel to work, stop at railway stations, bus terminals, airports, shopping zones, educational institutions and other destinations. But the services in place vary depending on the local situation, demand, number of drivers and the regulations.
The expansion also opens up opportunities for drivers and other people involved in the mobility ecosystem in the platform. Uber could also bring more drivers to its platform and offer them another route to connect with passengers as Uber expands into more cities. In smaller cities, where transportation options may be more limited, ride-hailing platforms can create even more revenue for vehicle owners and drivers.
India’s highly diverse geography and urban structure makes the country a great market for mobility companies. Large cities have established public transport networks but a lot of smaller cities are still dependent on autorickshaws, taxis, private vehicles and informal transportation. App-based platforms can bring more convenience to the passengers by providing a way to request rides online and get information about fares and drivers through a smartphone application.
The addition of 225 cities also reflects the changing expectations of Indian consumers. Mobile usage and digital payments are growing rapidly in India, so app-based services are now becoming familiar to almost every Indian city, even in the greater metropolitan areas. Digital delivery of food and shopping, financial services and transportation in smaller cities is becoming a lot more mainstream.
In such markets, Uber would be able to build brand recognition and long-term revenues from the expansion, to the benefit of Uber. The company might even be able to gain insight into local travel trends, consumer preferences and demand for different types of mobility services in an initial expansion and be able to target a different type of mobility service.
Competition is also an important factor in the Indian ride-hailing space. Uber is a very competitive business with dozens of well-established and regional mobility platforms in the market and many of them competing for riders and drivers. Uber could expand into other cities to gain an edge in this area and compete more aggressively in a market where there may be a lot less competition than what is actually there in large metropolitan areas.
A big part of the company’s larger strategy in India has also been to supply different types of mobility services beyond traditional car rides. Depending on market conditions, customers in different cities have access to autos, cabs and more. All of these options will be available to local customers and there is a regulatory approval process to get them to work.
The expansion could also benefit travellers visiting smaller Indian cities. Tourists and business travellers often encounter difficulty finding reliable transportation when coming to new locations. There is a stable app for ride-hailing, and passengers can use this, much better than booking transportation by phone (instead of negotiating fares at the roadside).
At the same time, it is a logistical challenge to operate across 225 cities. Ride-hailing companies need drivers to be involved enough in order to keep their fleet of drivers in a reasonable number of places at least during peak times. And they have to know the local transportation regulations and the local authorities in different places. Building a sustainable network in smaller cities can be a different thing to do than in large metropolitan markets.
Driver economics will also be crucial for the success of the expansion. The availability of rides, fuel charges, vehicle maintenance expenses, commissions and local demand can affect whether drivers will find platform-based mobility financially attractive. Uber’s ability to maintain a healthy driver-partner ecosystem will therefore be important as it enters new markets.
Another factor for riders will be service quality. Expansion alone is not enough to guarantee all services will be constant. Uber’s success in smaller cities will depend on how much rider demand is balanced with the supply of drivers and if Uber is able to keep up service standards in the future.
The expansion of India’s cities is in fact a result of the fact that these cities are growing and transportation needs change. Increasing urbanisation, increasing educational and employment opportunities and increasing movement between cities and surrounding towns is creating new mobility needs. In many emerging urban centres, the residents are looking for convenient transportation options that can complement the current public transportation.
Uber’s move can thus be considered part of the overall digital transformation of India’s transportation sector. In that way, by linking riders and drivers through a technology platform, Uber is part of digital mobility. The expansion can help to drive more online booking and digital payment in cities where these services are not yet established.
Another potential impact is greater visibility for local drivers and transport providers. Digital platforms can connect independent drivers to a larger customer base without forcing them to rely completely on traditional street-hailing methods. For consumers, this can provide additional choice when choosing transportation.
The addition of 100 cities also shows the significance of India’s small and emerging markets in the next phase of the country’s digital economy. With technology becoming more and more integrated into everyday life, services that were once associated with major cities are increasingly reaching tier-2, tier-3 and other developing urban centres.
At Uber, the goal will be to establish good operations in the added locations and have the riders and drivers demand for them (as well as more drivers to make the new ones) on board now. The company will have to adapt its product to the specificities of each market and keep the convenience of the service in mind for the most part.
So the expansion to 225 Indian cities is more than simply a size increase in Uber’s footprint. It’s a way of broadening the company’s presence in India’s evolving mobility ecosystem and reaching consumers in new markets that are becoming as important to the country’s economic and digital evolution.
When Uber expands services to 100 more cities, riders and drivers will be watching how quickly services are available and which types of ride categories are introduced in their locations. The expansion could strengthen competition in India’s mobility sector while giving consumers more transportation options.
With this move, Uber is signalling that its future growth in India will not only be dependent on the country’s biggest cities but also on the rapidly evolving mobility demand emerging in smaller urban centres. Enabling 225 cities gives Uber a much broader national reach and the company is well positioned to grow in India’s app-based transportation market at a time when it’s in a growth phase.
