As late as 2006, the point-to-point taxi market in India’s big metropolitan cities was completely unorganized. It was served either by unorganized, inconsistent and somewhat expensive private operators or by state government controlled pre-paid taxis offering a standardized but low quality service. Today, 15,000 plus professionalized air-conditioned cabs are available to customers in 6 big cities in a largely reliable, convenient and affordable manner. These services are fast spreading to other cities and the sector is seeing an active interest from new entrants and financial investors alike. Despite the glitches in the model, the underlying value of this service is undeniable. New models are emerging with innovations on cost and technology in a bid to make these services rapidly accessible to more and more customers. How has this change come about? What was special about that year 2006 that the market started opening up? Who are the players that identified this opportunity and tapped into it early on? What made them enter this space? What is the role and incentive of key stakeholders in this model – the operators, the customers and, the regulators? What are the challenges this model faces? What are the new opportunities and trends that will shape the trajectory of this space? We look at these issues and more in the first of its kind case study on the Indian Radio Cab Market.

1. RADIO CABS IN INDIA
Charting the birth and growth of an emerging industry
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2. This case read has been developed as part of the industry study
module at Sunstone Business School. It’s primary purpose is to
serve as basis for knowledge dissemination and class discussion
rather than to illustrate either effective or ineffective handling
of a business situation.
Case Read Team
Megha Jindal
Course Director, Sunstone Business School
Abhishek Nimonkar
Class of 2012, Sunstone Business School
Ankur Goel
Class of 2012, Sunstone Business School
Pankaj Yadav
Class of 2012, Sunstone Business School
Copyright © 2012 Anytime Learning Pvt. Ltd. All rights reserved. 2

3. Acknowledgements
Sunstone Business School would like to thank the following
executives from the industry for their valuable insights that
helped with the development of this case read:
Mr. Siddhartha Pahwa
CEO, Meru Cabs
Mr. Rajiv K. Vij
CEO, Easy Cabs
Special thanks to Dr. Bennett McClellan for guiding the case
read team with research methods and structure for analysis.
Dr. Bennett McClellan
Senior Faculty, Sunstone Business School
Copyright © 2012 Anytime Learning Pvt. Ltd. All rights reserved. 3

4. Context
As late as 2006, the point-to-point taxi market in India’s big
metropolitan cities was completely unorganized. It was served either
by unorganized, inconsistent and somewhat expensive private
operators or by state government controlled pre-paid taxis offering a
standardized but low quality service. Today, 15,000 plus
professionalized air-conditioned cabs are available to customers in 6
big cities in a largely reliable, convenient and affordable manner. These
services are fast spreading to other cities and the sector is seeing an
active interest from new entrants and financial investors alike. Despite
the glitches in the model, the underlying value of this service is
undeniable. New models are emerging with innovations on cost and
technology in a bid to make these services rapidly accessible to more
and more customers.
How has this change come about? What was special about that year
2006 that the market started opening up? Who are the players that
identified this opportunity and tapped into it early on? What made
them enter this space? What is the role and incentive of key
stakeholders in this model – the operators, the customers and, the
regulators? What are the challenges this model faces? What are the
new opportunities and trends that will shape the trajectory of this
space?
We look at these issues and more in the first of its kind case study on
the Indian Radio Cab Market.
Copyright © 2012 Anytime Learning Pvt. Ltd. All rights reserved. 4

5. Table of Contents
Radio Cabs - Market Overview..........................................................6
The Business of Fleet Taxi...............................................................10
Economics of Fleet Taxi Business.................................................12
Sector Levers.....................................................................................14
Potential Bottlenecks in Growth of Sector...........................23
Road Ahead.......................................................................................... 26
Concluding Thoughts......................................................................29
Sources.................................................................................................30
Contact Us........................................................................................... 31
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6. Radio Cabs - Market
Overview
As is the case with the growth story in every sector, certain key macroeconomic factors have been
catalytic in helping the radio cab industry in India take root and flourish.
Expanding middle class in a liberalized economy
The series of economic reforms unleashed in the India post 1991 positioned India as one of the
fastest growing economies in the world, clocking 6-7% 1 GDP growth rate in the last two decades.
Manufacturing industries like auto, shipping, aviation, food processing flourished under relaxed
norms for operations and enhanced competition. New services industries like telecom, IT & ITES,
financial services took root and grew leaps and bounds to become the dominant contributor to the
country’s GDP, their share rising from 43% in 1991 to 58% 2 in 2011.
The growth of these sectors had a direct and favorable impact on employment, wages, poverty rate
and, urbanization. Together, these have led to the emergence of a strong middle class segment of
population that is not only becoming larger but also wealthier. The middle class population
(defined as people with income ranging from INR 200,000 to INR 1,000,000), rose from 15 million
in 1991 to 160 million in 2011 3. This segment with its increasing disposable income started
demanding and has been willing to pay for better services across sectors including private and
public transportation.
Transformation in Auto Industry
The Indian automotive industry has undergone a massive transformation in the last two decades.
From being limited to a handful of local firms (and one JV with a Japanese firm, Suzuki) up until
1991, the industry today is immensely competitive with 14 multinational and domestic firms
offering a wide variety of options at different price points in personal as well as commercial
segments. Today, the country is one of the largest auto industries in the world, manufacturing
around 3 million4 passenger vehicles every year. Total vehicular traffic in India has gone up from 21
million vehicles in 1991 to 115 million5 in 2009.
This surge in the auto industry has enabled better quality options at varied price points for public
and private transportation alike. The radio cab sector has been a direct beneficiary, using a wide
range of sedan model cars at affordable price points to service its customers.
1!World!Bank!Data
2!Economic!Survey!2011912
3!Economic!Times!article,!Feb!2011!!
4!Report!on!Auto!&!Auto!Ancillaries!India,,!March!2012!
5!Road!Transport!Yearbook,!200792009,!Table!2
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7. Click the link below to download the entire case read.
http://sbr.sunstone.in/download-case-read-radio-cabs/