Uber ordered shutdown in India! State socialism in action

In a puzzling move by the Indian government, Uber, the taxi-sharing app that has become a global fad, was ordered to shut down the country completely by October 31, 2014. While the country is in dire need of Attracting as much foreign investment as possible, the government is resorting to decades of socialist policies, making India even less attractive to international companies.

Uber is a highly funded start-up that offers anyone the opportunity to become a taxi driver and take customers through a simple payment system. The website has revolutionized the taxi business in many parts of the world, where people have discovered that the system is part money saver and part carpooling.

It has certainly served as a controversial company that has witnessed large-scale protests from traditional taxi companies and businesses in places like London, Paris, and even San Francisco. When a taxi drivers union in London tried to ban the website / app, the government refused for fear that the city would appear hostile towards international companies. A smart move from a smart city.

Despite all the controversy, the company still grew stronger with strong backing from the Google and Fidelity companies. It soon entered the growing Indian market and grew throughout the urban areas of the huge country. However, like everywhere else, the taxi drivers were not very happy. In a country with the largest number of poor people in the world and a high birth rate / low-skilled work class, driving cars, buses, vans and rickshaws is viewed as a lifesaver by millions of uneducated people. After expanding to more than 10 densely populated Indian cities and slashing prices by 25%, even large, established taxi companies and car rental companies began to take notice of Uber.

These companies have now taken extreme measures to prevent Uber from operating in India. Complaints were filed with the Reserve Bank of India accusing Uber of violating the country’s strict currency laws due to its payment system.

In a classic move reminiscent of India’s socialist past, the bank has now given Uber until October to close! This would turn out to be a disastrous move by the central bank at a time when India requires the most investment possible. A similar case earlier this year caused many global retailers to reconsider their strategy in India when they understood that the government is pursuing populist / socialist policies to win rural voters.

The time is still in India and the government should rethink its strategy on international companies. International companies only bring technology, money and new business methods to a country and force local companies to catch up and improve their game. Uber would not have “destroyed” taxi drivers in India, but instead would have forced them to cut prices and introduce more services that add to customer benefits and economic growth.

It would be interesting to see how the Modi government deals with these issues in the next 5 years.