Unlocking Opportunities: Bike-taxis industry envisaged to drive economic growth with 5.4 million jobs by 2030, suggests KPMG in India study

Growing transportation demand along with rapid urbanization has started to burden urban infrastructure. Preference for personal mobility coupled with low utilization of public transportation systems, such as the metro rails due to the lack of a convenient last-mile connectivity option, has led to increasing traffic congestion in Indian cities and towns. Studies indicate that traffic congestion is expected to cost the Indian economy USD 22 billion per year across just New Delhi, Mumbai, Bengaluru, and Kolkata. Bike-taxis can play a significant role in aiding the public mobility ecosystem in India by offering a low-cost low-emission last-mile solution, as well as providing livelihood opportunities to several million Indian youth. Bike-taxis strong adoption by the masses is evident from the growth of 20%+ CAGR witnessed by the industry between 2019 and 2023.

Figure: Bike-taxi market, 2019-2023 (million rides)

Source: KPMG in India analysis 

However, the bike-taxi industry faces legitimacy challenges due to the absence of a uniform nation-wide policy structure. The recent advisory from MoRTH to all states and union territories to accept and process the application for contract carriage permits for motorcycles should help tackle the subjectivity.

The report addresses key questions surrounding the sector, structural developments crucial for the widespread adoption of bike-taxis, and their integration into the transportation ecosystem, to pave the way for informed policy formulation.

With insights garnered from over 2,500 bike-taxi drivers, the study dives deep into the motivations and concerns of those driving this revolution, offering invaluable perspectives for policymakers and industry stakeholders alike.

Tailwinds for the emerging bike-taxi industry:

• Bike-taxi are the ideal last-mile connectivity mode as it offers the best of all shared mobility modes including – affordability, journey time, ease of hailing, doorstep pick-up and comfort
• 100 per cent of the drivers are using an existing asset for bike-taxis. Of them, 60 per cent have recently upgraded their motorcycle, implying better asset utilization
• About 83 per cent of the drivers were open to paying an annual permit fee of INR 1,000-1,200
• Studies suggest that bike-taxis emits 12 per cent and 60 per cent less emission than shared CNG and diesel auto-rickshaws, respectively
• KPMG in India expects 30 – 35 per cent electric two-wheeler penetration by 2029-30

Livelihood potential from bike-taxis (gig-economy)

• As per Economic Survey 2020-21, India has emerged as one of the world’s largest flexible-staffing (i.e., gig and platform work) country across the globe
• With India’s aim to reach a GDP per capita of USD 4,000 by 2030, there exists a potential to provide livelihood opportunities to 5.4 million bike-taxi drivers by 2030
• The bike-taxi industry has the potential to provide livelihood to approximately five per cent of the estimated 90 million non-farm jobs required by 2030
• Approximately 50 per cent of the drivers chose bike-taxi driving as gig work in addition to their primary occupation

Key Challenges and Opportunities

Challenges:

• Absence of a uniform policy structure across states poses regulatory hurdles and uncertainty for bike-taxi operators
• Addressing safety concerns is of paramount importance, and instead of abandoning the concept, it would be key to formulate and adopt policies around safety regulations, such as trainings by safety providers, and improving and enforcing helmet standards, that would build a safe systems approach

Opportunities:

• Addressing pressing transportation challenges through effective congestion mitigation strategies
• Addressing sustainability goals by offering an eco-friendly solution to urban mobility
• Facilitating essential first and last-mile connectivity, significantly enhancing point-to-point travel accessibility
• Unlocking substantial potential for socioeconomic advancement, particularly in providing valuable livelihood opportunities, with a focus on empowering the youth

Rohan Rao, Partner, Automotive and Lead, Electric Mobility, KPMG in India, said, “The insights gleaned from our in-depth analysis of bike-taxi drivers are pivotal for crafting effective policy frameworks. As most drivers view bike-taxi driving as a temporary endeavour, lasting up to two years, it’s imperative to adopt flexible regulations. To address industry pain points through insights, we have produced holistic recommendations such as implementing legal recognition for bike-taxis, integrating them with public transport, and introduction of a new type of ‘Short duration bike-taxi registration’ with ‘concealed/discreet authorisation’, etc. Our report underscores India’s pivotal role in the global automotive landscape, serving as a roadmap for navigating this dynamic industry and help shape the future of mobility in India.”

Raghavan Viswanathan, Associate Partner, Automotive and Electric Mobility, KPMG in India, said “It’s time states in India start looking at bike-taxis as a solution rather than a problem to their congestion woes. Bike-taxis can provide an extremely efficient last-mile connectivity option for metro rails, many of which are struggling with sub-par utilization. With close to USD 4 Bn committed to upcoming projects till 2026, ‘on-demand low-cost shared bike-taxis with the ability to operate at efficient speeds and frequency’ will improve user access to metro rails thereby reducing the need for private motorization”