Indian ride-hailing app Ola acquires rival for $200 million

While SoftBank-backed Ola has over 100,000 vehicles on its platform across 67 cities, TaxiForSure, run by Serendipity Infolabs, has over 15,000 vehicles across 47 cities.

Ola is positioned as a mobile app that does not own any of the taxis, nor does it directly or indirectly employ the drivers, all of which are supplied by third parties. It works with driver entrepreneurs, unlike TaxiForSure which deals with a network of cab operators.

TaxiForSure has also focused on the low-end of the market though Ola has also ventured into low-cost three-wheeler vehicles, popularly known locally as auto-rickshaws.

The potential of the market has become evident with Uber Technologies making a pitch for it. But the U.S. company has fallen foul of local authorities after a Uber driver in Delhi allegedly raped a woman passenger in December. Uber was banned in Delhi after this incident.

After the rape, other app based taxi companies have also come under scrutiny. Delhi's transport department has, for example, framed new rules, called the Radio Taxi Scheme that places tighter controls on taxi operators.

The companies will also have to meet a number of conditions including offer a call center, have a registered office in Delhi and an official website with extensive information on its operations, and provide panic buttons in the vehicles.

After the acquisition, TaxiForSure and Ola will operate as separate entities. Ola paid both in cash and equity for the deal.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com