Government Unveils Cooperative-Based Taxi Service
In a move set to challenge ride-hailing majors like Ola, Uber, and Rapido, the government announced the launch of ‘Sahkar Taxi’ service that will register two-wheeler and four-wheeler taxis as well as rickshaws.
The central government’s entry into the ride-hailing sector marks a significant development in India’s transportation landscape. By introducing the ‘Sahkar Taxi’ service, the government is positioning itself as a direct competitor to established private platforms that have dominated the market for years.
This comprehensive service aims to create an inclusive transportation network by accommodating various vehicle categories, including two-wheelers, four-wheelers, and rickshaws, providing consumers with multiple options based on their transportation needs and budget constraints.
Speaking at the Lok Sabha, union minister Amit Shah said that the initiative is aimed at giving drivers’ full control over their earnings, free from commission cuts by third party platforms.
Union Minister Amit Shah’s announcement in the Lok Sabha underscores the government’s intention to address one of the most persistent pain points for drivers working with existing ride-hailing platforms: commission structures that significantly reduce their take-home earnings.
By emphasizing “full control over earnings” as a central feature of the Sahkar Taxi service, the government is directly responding to ongoing grievances within the driver community and positioning its service as a more driver-friendly alternative to the current market leaders.
He further said that the service would allow cooperative societies to register taxis, rickshaws, two-wheelers, and four-wheelers without involving intermediaries. The system is modelled on app-based services but built around a cooperative structure that puts drivers at the centre.
The cooperative model represents a fundamental departure from the corporate structures that characterize existing ride-hailing platforms. By enabling cooperative societies to register vehicles directly, the government is creating a pathway for collective ownership and management within the transportation sector.
While maintaining the technological convenience of app-based services that consumers have grown accustomed to, the Sahkar Taxi initiative introduces a structural innovation by placing drivers at the center of the business model rather than treating them as mere service providers for a corporate entity.
“In the coming months, on the cooperative basis, we are going to launch a government cooperative ‘Sahkar Taxi’ service like Ola and Uber. The service will register two-wheeler taxis, rickshaws, as well as four-wheeler taxis. The profits from this service will not go to any big industrialist but will go solely to the drivers of the vehicles,” the minister said.
Minister Shah’s direct comparison to Ola and Uber clearly establishes the competitive intent behind the Sahkar Taxi initiative. The government is not looking to create a niche alternative but rather to directly challenge the dominant players in the market.
His explicit statement about profit distribution—emphasizing that earnings will flow to drivers rather than “big industrialists”—highlights the socioeconomic philosophy underpinning this initiative. The government is positioning Sahkar Taxi not just as a business venture but as a mechanism for more equitable wealth distribution within the transportation economy.
Centre’s Taxi Service May Challenge Ola, Uber Duopoly
As Shah highlighted that the central government’s taxi service will directly share profits with drivers, it will likely challenge private ride hailing giants such as Ola and Uber who charge commissions for cabs.
The profit-sharing model proposed for Sahkar Taxi represents a direct challenge to the revenue models of established ride-hailing companies. By promising that profits will flow directly to drivers, the government is targeting one of the most controversial aspects of the existing platforms.
This approach could potentially disrupt the current duopoly by presenting both drivers and consumers with an alternative that claims to offer greater financial benefits to service providers while potentially maintaining competitive pricing for users.
Both Ola and Uber charge around 20% commission for cabs. Besides, these platforms have also faced criticism in the past few years from drivers demanding fair platform commissions and better earnings predictability.
The specific mention of the approximately 20% commission charged by both Ola and Uber highlights a key financial metric that the government likely aims to improve upon with its cooperative model. This substantial commission percentage has been a persistent source of contention among drivers working with these platforms.
Beyond the commission percentage itself, the reference to drivers’ demands for “fair platform commissions and better earnings predictability” addresses more systemic issues in the current ride-hailing ecosystem. Earnings volatility has been a significant challenge for drivers, affecting their financial planning and economic security.
On top of that, the commission structure also keeps changing amid incentives and deductions offered by the platforms, further raising concerns for the drivers.
The issue of fluctuating commission structures adds another layer of complexity to drivers’ challenges with existing platforms. The constantly shifting landscape of incentives, bonuses, and deductions creates an environment of financial uncertainty for drivers who struggle to predict their earnings consistently.
This unpredictability has been a source of ongoing frustration within the driver community, potentially creating an opportunity for Sahkar Taxi to attract drivers by offering more transparent and stable earning structures.
Considering this, the launch of the government’s taxi service could appeal to customers if they offer affordable cab services and budget-friendly fares.
The potential consumer appeal of Sahkar Taxi hinges on its ability to translate the different business model into tangible benefits for riders. If the reduction or elimination of corporate commissions allows for more competitive pricing without reducing driver earnings, the service could gain significant market traction.
Affordability remains a critical factor in consumer decision-making when choosing transportation options, suggesting that the government will need to balance driver benefits with competitive pricing to successfully challenge the established players.
However, it is pertinent to note that Ola rolled out a subscription model and Uber a zero-commission model for auto drivers. “Given the industry’s shift towards a subscription-based model for drivers, we have decided to align our approach accordingly so as not to be at a competitive disadvantage,” an Uber spokesperson told Inc42.
The competitive landscape is already evolving in response to driver dissatisfaction and emerging alternatives. Both Ola and Uber have begun experimenting with different revenue models, particularly for auto-rickshaw drivers, moving away from pure commission-based approaches.
Uber’s statement about aligning their approach with the industry’s shift toward subscription models indicates that the major platforms are aware of the competitive threats posed by alternative business models and are actively adapting their strategies to maintain market position.
Other Players In Ride-Hailing Space And Their Pricing
In the last few years, startups such as BluSmart, InDrive, Rapido, Namma Yatri, Red Taxi, and Snap E Cabs entered the space to grab a market share.
The ride-hailing sector has already seen significant fragmentation beyond the Ola-Uber duopoly, with numerous startups entering the market with differentiated value propositions. This growing competitive landscape suggests that Sahkar Taxi will be entering an increasingly crowded market with multiple players vying for customer attention.
Each of these newer entrants has attempted to carve out a niche through various strategies, including specialized vehicle types, geographic focus, or alternative business models, indicating the diversity of approaches possible within the ride-hailing ecosystem.
Among these, Namma Yatri, developed by fintech startup Juspay and backed by Nandan Nilekani’s Beckn Foundation, started with a zero-commission model. It currently offers two payment options to auto-rickshaw drivers: INR 25 for unlimited trips per day or INR 3.50 per trip with no charges after 10 trips.
Namma Yatri’s innovative approach to driver compensation provides a potential blueprint for alternative revenue models in the ride-hailing sector. The flat fee structure—either as a daily subscription or a per-trip charge with a daily cap—represents a significant departure from percentage-based commissions.
This model offers drivers greater earnings predictability and potentially higher take-home pay during busy periods, addressing some of the key concerns that have driven dissatisfaction with traditional platforms.
On similar lines, Rapido also introduced a zero-commission model for drivers, and currently allows users to set a higher price per ride to get guaranteed rides.
Rapido’s zero-commission approach coupled with the flexibility for users to offer premium rates for guaranteed service represents another innovative model in the evolving ride-hailing marketplace. This user-driven pricing mechanism creates a market-based approach to managing supply and demand during peak periods.
The bidding system gives passengers the option to prioritize service certainty over price, while potentially increasing driver earnings during high-demand situations without platform intermediation.
While InDrive takes 10% commission per ride which includes a 5% platform commission and GST for the ride, BluSmart is an EV-centric mobility startup looking to challenge the duopoly.
InDrive’s lower commission rate of 10% (half of which covers platform costs and half taxes) presents a middle ground between traditional high-commission models and zero-commission approaches. This reduced rate aims to offer drivers higher earnings while maintaining sustainable platform operations.
BluSmart’s focus on electric vehicles highlights another dimension of competition in the ride-hailing space—environmental sustainability. By emphasizing electric mobility, BluSmart is targeting environmentally conscious consumers who may prioritize reduced emissions over other factors when choosing transportation services.
The ride hailing market volume is expected to reach $11.64 Bn by 2029, displaying an annual growth rate of 8.85% during the period of 2025-2029, as per Statista. The market is projected to grow substantially with the number of users predicted to reach 380.60m users.
The substantial projected growth of India’s ride-hailing market highlights the significant economic opportunity that Sahkar Taxi aims to tap into. With market volume expected to reach $11.64 billion by 2029 and annual growth of 8.85%, the sector represents a major economic frontier.
The predicted user base of 380.60 million people underscores the massive scale of the potential market, suggesting that there may be room for multiple successful platforms even as competition intensifies. This growing market provides the backdrop against which the government’s entry into ride-hailing through Sahkar Taxi will play out in the coming years.
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