“25% of my time is spent in engaging with the government” said Bhavish Aggarwal, co-founder and CEO of the online car rental service Olacabs, while discussing his experience in working with the government regulators in the country, at a session in the recently concluded Nasscom Product Conclave 2013.
Aggarwal said initially the time spent was for firefighting several regulatory issues they faced which they had no understanding about, but now it is a more proactive approach, where they engage with the state government before launching their operations in that specific city.
Intent vs Execution of Govt policies
Agarwal said the intent of the government policies is always consumer protection but the execution and the ground level implementation of the policy leaves a lot of variables to be decided and in most cases, the policy overreaches a lot either on the business side of things or due to a lot of vested interests involved. For instance, in the online cab industry, there are taxi unions, select bureaucrats and competitors who don’t have clean operating principles.
“What we’ve primarily seen is a wrong implementation of policies. The policy was intended correctly but the intent was some 20 years ago and the speed at which the policy iterates is too slow for modern technology businesses to thrive (in the country).”
Regulatory System in India vs West
Agarwal said the interface between the businesses and the government hasn’t matured to the level seen in the west, especially in the cab industry. For example, the urban ground transport hasn’t seen any innovation on the technology or customer service for some time. “We haven’t grown beyond an auto rickshaw here yet and the government is in that mindset of we have to control price, we have to control licensing etc, whereas in the west the industry has at least moved beyond that”.
“We are in the industry where the government over regulates. For instance, auto rickshaw pricing is driven by the government, which leads to the auto rickshaw overcharging consumers on his own, since he is not able to make enough money or there are artificially constrained number of licenses given to taxis, which constraints the entire ecosystem. Therefore, the right approach for regulation is somewhere in the middle, neither the industry nor the government can do all”. Update: Olacabs has informed that over regulation is true only in case of basic transport like autorickshaws and the cab industry is not heavily regulated on pricing yet, which allows them to “give value in return for a fair price which customers would like to pay for services”.
Do Collective Forums for Policy Work?
“At a certain level, collective forums does help make a point more strongly, but the problem is, there is no collective forum in our industry since every company follows a slightly tweaked model due to the industry’s opaque policy. Even if we make a collective forum, it will comprise of different voices in the same forum.”
On Ridesharing: Aggarwal believes that it currently doesn’t make business sense to offer ridesharing service in the country, but they would want to allow consumers hail their cabs on the road, which is currently not allowed by the regulations.