×

Indian Uber rival Ola launches $0.09 per/KM low-cost rides

It's not just the temperatures in India that are high. Tensions between the country's top two taxi apps – Uber and Ola – continues to rise.

The latest move comes from Ola – a $5 billion start-up and leading player in the market, which has introduced Ola Micro, a stripped-down version of its ride service which it claims already has completed half as many rides as the total booked by Uber India.

"In three weeks, we have put up a category (Ola Micro) which is already 50 per cent of all of Uber's daily bookings in the country," Raghuvesh Sarup, chief marketing officer at Ola, told CNBC in an emailed statement on Tuesday.

"And in one month, Micro alone will surpass the number of bookings our competitor does in a day across all categories," Sarup added in a follow-up phone interview.

Ola

Like Uber, Ola has several different services, from motorbikes on-demand to its "Prime" premium service. Uber also has a motorbike service. Ola is essentially claiming that its Micro offering alone will beat the total number of bookings for Uber across all of the U.S. rival's different categories.

Uber did not respond to requests for comment from CNBC.

Ola Micro is the Indian start-up's cheapest service, costing 6 rupees ($0.09) per kilometer with a base fare of 40 rupees. Executives at the company are hoping that Micro will get a larger number of customers on board the platform who then eventually end up using the more expensive Prime service.

"We call Micro the onboarding plank into the platform. That is exactly what Micro is promising to be. Inactive users of cabs are now using Ola Micro frequently," Sarup told CNBC.

Ola Micro is available in seven cities including Delhi, Mumbai and Bangalore.

But Ola is not first to the game with ultra-cheap rides. In 2014, Uber introduced UberGO with prices ranging from 7 rupees per kilometer to 13 rupees depending on the city.

India is a big battleground for Uber as it continues to expand internationally. Last year, the U.S. ride hailing app – which is valued over $62 billion – pledged to pour $1 billion into expansion in India and has received funding from Indian business giant Tata. After that investment, it said it expected to hit "over a million trips a day in the next six to nine months".