Why Uber is offering free cab rides in India

Stretching limits.
Stretching limits.
Image: Reuters/Kai Pfaffenbach
We may earn a commission from links on this page.

Uber just took promotions to the next level—again.

Starting Wednesday, the online cab service is giving free rides to its customers in India till Sunday—a tactic to promote Paytm, a mobile wallet that Uber partnered with earlier in November.

The offer allows customers five free rides worth up to Rs300 ($5) each, but they must pay through Paytm.

Uber’s partnership with Paytm was the outcome of a long-running dispute with the Reserve Bank of India (RBI) over the cab service’s payment mechanism.

“By running a free week, we’re spreading the love, and encouraging more users to try Uber, and in particular, our new wallet solution,” Bhavik Rathod, Uber’s general manager in Bangalore told Quartz in an email.

In the past, Uber has run similar free weeks in Lincoln and Michigan.

In India, the US-based company has been rather flamboyant with its promotional offers. In June, Uber launched a limited-period service that allowed customers in Mumbai and Bangalore to book helicopter rides for Rs5,000 ($85).

Uber, of course, can afford such expensive promotional offers. The company has so far raised $1.6 billion (paywall) and is one of most valuable startups in the world today. And it now wants to raise another $1 billion in funding.

Uber’s domestic competitor—Ola— does not have the same financial firepower; it has so far raised a total of $315 million.

And as the online cab booking space heats up in India with EasyCabs, Meru and TaxiforSure vying for a larger share of the market, Uber is continuously trying to make deeper inroads into India.

In November, it launched UberGo, which offers hatchbacks at a base rate of Rs40 ($0.65) as an answer to Ola Mini, a cut-rate service from Olacabs—which was, in turn, launched in response to UberX.

Ola—which has a larger fleet in India than Uber—is not intimidated. ”Being an Indian company, we understand the local nuances better than anybody else,” Anand Subramanian, a spokesperson for Ola told Quartz. ”We are a far larger player than any other company (in India).”