Photographer: Dhiraj Singh/Bloomberg

Uber Drivers in India Outearn Some Bankers. But for How Long?

Updated on
  • Drivers say incentive payments have declined this year
  • India is Uber's largest market outside the U.S. geographically

Sujas Kumar Singh, a 22-year-old school dropout who drives taxis in India’s capital, sees growing concern about falling earnings from Uber Technologies Inc.’s service in New Delhi.

Singh said Uber’s incentive payments -- a sum paid on top of each trip’s fare to woo drivers -- have dipped to as low as 125 rupees ($1.90) since May. That’s making it harder for some people to meet loan installments on vehicles purchased to work for the ride-hailing app. Uber spokesman Karun Arya said incentive payments are down across Indian cities.

Sujas Singh

Photographer: Dhiraj Singh/Bloomberg

"Those who bought cars in the last four months are scared of incentives coming down further," Singh said in an interview, adding he’s provided rides on Uber’s smartphone-based platform for two years.

Cooling incentives highlight the question of how long the San Francisco-based company can fund subsidies to spur expansion in its largest market geographically after the U.S. Singh said Uber drivers are still earning about 80,000 rupees monthly -- or more than double the pay of junior retail bankers in India, recruitment specialist ManpowerGroup Inc. estimates.

Uber’s Arya said incentive programs are temporary, often change and differ across the 22 Indian cities where the platform operates. While multiple drivers in New Delhi said the payments were about 400 rupees per trip in February, Uber denied the figure was ever that high.

200,000 Drivers

The company expects to have more than 200,000 drivers in India by 2016, puts its market share at over 40 percent and in July said it plans $1 billion of investment in the country to achieve over 1 million trips per day by next year. The drivers are independent contractors working with the platform, rather than employees.

Uber App

The Uber app

Photographer: Dhiraj Singh/Bloomberg

Taxi apps such as Uber see a long-term opportunity in India’s poor public transportation services, low car ownership levels and 1.3 billion population.

Uber can keep adding customers and drivers even as it pares subsidies given the quality of service it offers and because its pay levels will remain attractive, according to Technopak Advisors Pvt.

While Indian taxi stands provide unclean cars and confusing charging structures, Uber offers transparent pricing and a pick up within a few minutes, encouraging customer loyalty, Technopak Chairman Arvind K. Singhal said in an interview.

Average monthly white-collar starting pay in India is about 24,000 rupees, ManpowerGroup Inc.’s India President Srikanth Rengarajan said in an interview. That’s less than half the amount driver Singh says he can earn.

As in other nations, Uber faces regulatory hurdles and domestic competition in India.

Unlike in the U.S., only for-hire vehicles rather than individuals with private cars are allowed to offer services using a smartphone application. The central government this month also outlined guidelines for how local officials can license app-based ride-hailing service providers. 

That includes recommended safety measures, after a high-profile incident in December when a woman accused an Uber driver, Shiv Kumar Yadav, of raping her during a ride home. A court in Delhi on Tuesday found him guilty.

$50 Billion

Among Uber’s Indian competitors, Local rival Ola, owned by ANI Technologies Pvt., said in September that it will lease cars to boost the number of vehicles in its network.

Despite challenges, Uber has attracted investments from Microsoft Corp., Google Inc. and Inc.’s founder Jeff Bezos, valuing the company at $50 billion.

As cabs lured by app-based platforms proliferate in India, drivers are facing stiffer competition for rides. But the money is still good enough to attract workers like 51-year-old Bhag Singh -- no relation to Sujas -- who went from earning 30,000 rupees a month driving a motorized rickshaw to 100,000 rupees with Uber, before a recent dip back to 80,000 rupees.

Bhag Singh

Photographer: Dhiraj Singh/Bloomberg

Despite the slowdown, Bhag Singh sees an opportunity for the next generation of his family.

"My son views it as a career option in case he doesn’t get a good job after he graduates," Singh said.