India's ban on online taxi services fuels uncertainty over investments

[MUMBAI] A ban on online taxi services in India, following the arrest in New Delhi of an Uber driver accused of rape, has brought uncertainty to the millions of dollars of international investment pumped into Uber's Indian rivals Ola and TaxiForSure.

Ola raised US$210 million in October from a group led by Japan's SoftBank Corp. TaxiForSure attracted US$30 million in August from backers including US private equity firm Accel Partners, known for investing early in Facebook Inc .

But concern about passenger safety prompted the government to halt taxi services from companies not registered as taxi providers. It also ordered a review of safety measures which could lead to in-car cameras and GPS tracking being made compulsory.

Uber, Ola and TaxiForSure can continue offering services in the states where they are registered. But in other states where they operate, they will not be able to register until they meet as yet undetermined safety standards in a country notorious for slow governance. "It's a real concern. I don't think banning is a great idea to resolve a law and order issue," said the managing director of a US private equity fund that has invested in Ola. The person declined to be identified due to the sensitivity of the issue.

Unregistered taxi services have been banned in New Delhi and Hyderabad. Similar decisions are likely in Mumbai, Bengaluru - formerly called Bangalore - and other cities, local media reported.

Ola and TaxiForSure said they are working with states to address registration and safety. Ola has started installing GPS devices in cars on its platform, while TaxiForSure is working with taxi firms to follow processes suggested by authorities.

Uber said it will review its India operations and intensify driver screening.

REUTERS