How ONDC could be a shortcut for Uber in India

Uber CEO Dara Khosrowshahi’s second visit to India was a lot different from his first back in 2019. Back then, the survival of Uber was being questioned. 

Khosrowshahi’s return, on the other hand, was a far more positive affair, with the company managing a massive turnaround in the intervening years, rising from the depths of corporate governance issues and huge losses to become a highly profitable company with a market capitalisation of over $170 billion.

In Delhi, he played cricket (for the first time in his life) with drivers, drove an electric auto, met some of the country’s top industrialists, including Gautam Adani, Anand Mahindra, and Harsh Goenka, and also visited top government officials, including cabinet minister Piyush Goyal.

Khosrowshahi’s visit comes on the back of multiple reports over the last two years about Uber’s potential merger with rival Ola in India. Though both companies have strongly denied the reports, doubts have always persisted. This visit, the company was probably hoping, would put an end to such “rumours”. 

These doubts and rumours largely arise from the scale of India’s contribution to Uber’s overall numbers. Uber’s India revenue barely adds anything to its global heft. While the company’s ride-hailing revenue in India in the year ended March 2023 stood at Rs 623 crore (~$75 million), its global revenue for calendar year 2023 was $37 billion. India, though, remains an important market for Uber, especially as it has lost the ride-hailing battle in China and Southeast Asia. 

Despite this, the Uber app in India has failed to grow in the same way as its Western offerings. Indeed, it is merely a shadow of what it is in markets such as the US. In India, Uber only has its core ride-hailing business and a parcel delivery service. By contrast, in Western markets, Uber has a bouquet of services—food delivery, grocery delivery, a freight business, transit through metro, car and bike rentals, and even event discovery. It is like a “super app” for all things mobility and logistics.

This gap, though, could be bridged through India’s public digital infrastructure. During a fireside chat with Nandan Nilekani, Khosrowshahi and Nilekani teased UberEats’ return through the government-backed Open Network for Digital Commerce (ONDC). In January 2020, Uber sold its UberEats business to Zomato in return for a stake in the latter as the ride-hailing giant lacked the appetite to take on Zomato and Swiggy in India’s gruelling food delivery war.

While Khosrowshahi joked about discussing the matter with the board before talking about it in public, he was all praise for the open, public digital infrastructure India has built, calling it unique and promising.

While it is perhaps premature to begin speculating about UberEats’ return, soon after the fireside chat with Nilekani, Uber announced that it had signed a memorandum of understanding with ONDC to “explore an integration with the network to expand the range of mobility offerings on the Uber app”.

Uber did not elaborate on how such an integration would work. Would it open up its network of drivers to ONDC? If yes, which categories? Is it really bringing back UberEats? Is it all just a way to curry favour with the government?

Later in the day, Reuters reported that Uber is exploring offerings such as intercity bus and metro rail ticket bookings in India as part of its partnership with ONDC, indicating that Uber is not opening up its walled garden yet. Instead, it seems to merely be following what some of India’s mobility startups have done over the past month. Earlier this month, Rapido announced that it had partnered with ONDC to enable customers to book tickets for Chennai metro rides. On the same day, intercity bus booking platform redBus announced its own partnership with ONDC to provide multi-modal transport booking services across various cities, allowing users to book autos through the redBus app.

An executive associated with one of the leading ride-hailing companies had this to say. “While ONDC has made significant strides and headlines in the mobility space more than e-commerce, we are unlikely to see a utopian world where every player opens up their platform to the network. Instead, we are likely to see more B2B integrations between various companies,” he said. “It will be about connecting different services to connect through the ONDC API.”

Instead of building a lot of businesses from the ground up, which may be expensive, Uber could just plug into ONDC APIs to populate its app with new services. While it may not make sense for the company to invest a huge amount of capital in India given how small its business is in the global scheme of things, ONDC could allow it to offer the use cases it needs to grow its business and keep users constantly engaged on its app.