The rise of the sharing economy - Ernst & Young

The rise of the sharing economy The Indian landscape October 2015

Foreword The sharing economy has been on an exponential growth curve over the last couple of years and has been the subject of considerable interest to the stakeholders and policy-makers across the globe. Technology is pivotal to the growing concept of sharing economy, to enable scale and enhance economic impact. A number of sharing platforms have emerged which enable individuals to share goods and services like cars, houses, household products and services. The proliferation of mobile devices has heralded a digital revolution to serve as a catalyst of growth. The appeal of the sharing economy lies in the fact that the sharing platforms create a win-win situation for all the stakeholders. The benefits of the sharing economy are manifold - including on-demand access to goods and services, efficient utilization of unused inventory of assets across industries, leading to a multiplier effect such as increased employment, consumerism, digital literacy and the rise of micro-entrepreneurship. The concept of the sharing economy is still at a nascent stage in India. While sharing personal products (such as one’s own home or car) which the owner is using currently is still negligible when compared to the West, the adoption of sharing platforms has been encouraging. This has been driven by the emergence of aggregators in industries like personal transportation and hotel room bookings. For the sharing economy to make further in-roads in India, the sharing platforms will have to address a few key imperatives. This includes fostering trust between the individuals involved in a transaction. A technology platform that provides a transparent pricing, verified listings and background checks, and assured delivery of services will reinforce consumer faith in these platforms. We believe that the sharing economy will open up a number of interesting possibilities across different economic activities and change the future of work, production, and collaboration. The sharing economy also represents a paradigm shift in the employment market and enables many individuals to attain gainful employment through the rise of micro-entrepreneurship. This report aims to understand the landscape of the sharing economy in India, the associated benefits and challenges. This report also covers various stakeholders’ perspectives on the drivers and challenges in adopting the concept. We hope you find this report useful. Ravi Gururaj Chairman, Nasscom Product Council

Foreword The concept of “sharing” is not entirely new as some of the earliest forms of human transactions involved bartering of goods and services without any monetary exchange. The digital evolution brought about by technology has taken this concept forward and created opportunities where individuals can monetize their skills and suitably use underutilised resources. The emergence of sharing platforms is changing the way traditional industries such as travel and transportation, food & beverages, accommodation and services conduct business, and is forcing the relevant stakeholders to re-evaluate their business models. The sharing economy has far reaching implications; some prominent positive ones including increased convenience, improved resource utilization, job creation, improved digital awareness and environmental benefits. The growth of the sector is evident from the fact the global sharing economy is forecasted to grow at a CAGR of 139.4% to reach US$115 billion by 2016 from US$3.5 billion in 2012. In many countries, it is observed that “shareable goods” (such as vehicles, drills, lawn-movers) account for 20-30% of household expenditure. If the sharing economy platforms are effectively used, they would help improve the utilization of these underutilised shareable goods, thereby reducing the overall spends. In the Indian context, the appeal of the sharing economy as a concept lies in the fact that personal asset ownership (such as cars) is comparatively lower. The sharing economy, by its very nature emphasizes on the re-use of assets rather than absolute ownership, which helps individuals to experience the benefits of these assets without really owning them. On the supply side, the sharing economy is transforming the work force and is making the road to entrepreneurship more accessible for many people. In India, the biggest impact of the sharing economy has been felt in the personal transportation space, where the emergence of these platforms has made it convenient for any individual to commute from one point to another. The concept has also become very relevant to industries like accommodation, food and grocery, household goods and healthcare. It is also likely to emerge as a growth driver for other specialised and niche services like hyper local, medical appointments and supplies, unorganised service sector expansion among others. We believe this sector is poised to grow and the entire stakeholder community within the sharing economy ecosystem including the society, government and regulators will witness the underlying benefits this offers. The extent of success of the concept will also depend on how proactively the requirements of the sharing economy are addressed from a regulatory and policy perspective. The insights in this report are based on detailed and comprehensive interactions with various stakeholders including sharing economy companies, consumers, suppliers, investors and lawyers among others and we would like to thank each one for the time taken to share their perspective with us that has made the analysis more meaningful. Ranjan Biswas, Partner and National Director, Technology, Media, Telecom Ernst & Young LLP

Ankur Pahwa, Partner, Technology, Media, Telecom Ernst & Young LLP

Contents

01 02 03 04 05

The sharing economy – view from the top

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Impact and benefits of the sharing economy

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Challenges and regulatory hurdles for the sharing economy

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Sharing economy and its role in key initiatives of the Government of India 29

The opportunity ahead for the sharing economy in India

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The sharing economy – view from the top

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he shar ing eco no m y is a so cio - eco no m ar o u nd t he shar ing o f hu m an and phy inclu des t he shar ed cr eat io n, pr o du ct io n, and co nsu m pt io n o f g o o ds and ser v ices b organizations.

ic eco sy st em b u ilt sical r eso u r ces. It dist r ib u t io n, t r ade y dif f er ent peo ple and

S har ing eco no m y act iv it ies f all int o f o u r b r o ad cat eg o r ies: •

R ecir cu lat io n o f g o o ds •

Increased utilization of durable assets •

E x chang e o f ser v ices •

S har ing o f pr o du ct iv e asset s S har ing b u sinesses eit her : 1 .

O w n g o o ds o r pr o v ide ser v ices t hat t hey r ent t o cu st o m er s, o f t en o n a sho r t - t er m b asis, o r

2 .

C r eat e peer - t o - peer plat f o r m s co nnect ing pr o v ider s and u ser s f o r t he ex chang e, pu r chase, o r r ent ing o f g o o ds and ser v ices. 1

to hospitality platforms such as Stayzilla, Stayology and OYO R o o m s ( ho spit alit y ) . The u nit ing f act o r f o r t hese co m panies and init iat iv es is t heir ab ilit y t o b r ing peo ple t o g et her , o f t en through an online platform, to share or exchange underutilized asset s w it ho u t lar g e t r ansact io n co st s. The shar ing eco no m y has spu r r ed “ m icr o - ent r epr eneu r s” and f acilit at ed t he cr eat io n o f new m ar k et s and eco no m ic act iv it y where none previously existed. Enterprising citizens can now g ener at e inco m e b y r ent ing asset s as v ar ied as f u r nit u r e, cam ping eq u ipm ent and par k ing spo t s. The pr o lif er at io n o f dig it al plat f o r m s and m o b ile applicat io ns in r ecent y ear s has b een t he pr im ar y dr iv er f o r t he m o m ent u m in co llab o r at iv e co nsu m pt io n in r ecent y ear s. A lt ho u g h it is a r elat iv ely new co ncept in India, it is pr ev alent acr o ss t he g lo b e in t he f o r m o f peer - t o - peer r ideshar ing ( B laB laC ar ) , acco m m o dat io n- shar ing and r ent ing ho u seho ld it em s. G lo b ally , t he shar ing eco no m y is est im at ed t o g r o w at a C A G R o f 1 3 9 . 4 % t o r each U S $ 1 1 5 b illio n b y 2 0 1 6 f r o m U S $ 3 . 5 b illio n in 2 0 1 2 . 2

This can enco m pass ev er y t hing f r o m cr o w d- f u nding sit es t o o ndem and t echno lo g ies, su ch as U b er and O la ( t r anspo r t at io n) ,

D iagram 1 : S egments of the sharing economy

P eo ple/ S k ills

H ealt h H o u seho ld g o o ds

L o g ist ics E du cat io n

F inancial ser v ices Tr anspo r t at io n

A cco m o dat io n

1 R au ch. D aniel E . and D av id S chleicher . L ik e U b er , B u t f o r L o cal G o v er nm ent al P o licy : The F u t u r e o f L o cal R eg u lat io n o f t he S har ing E co no m y . G eo r g e M aso n L aw & E co no m ics R esear ch P aper , N o . 1 5 - 0 1 2 “ S har e. D o n’ t O w n: The S har ing eco no m y t ak es o f f , ” F o r b es India w eb sit e, w w w . f o r b esindia. co m / ar t icle/ chg sb / shar e. - do n’ t - o w n- t he- shar ing - eco no m y - t ak eso f f / 3 9 2 4 1 / 0 , accessed 3 0 S ept em b er 2 0 1 5 ;

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The r ise o f t he shar ing eco no m y

This shar ing eco no m y co u pled w it h new t echno lo g ies dr iv es substantial economic, social and environmental benefits b y cu t t ing do w n co st s, co nser v ing r eso u r ces and r edu cing env ir o nm ent al im pact . The shar ing eco no m y ser v ices in m o st sect o r s in India ar e in it s init ial st ag es. N o net heless, t he ado pt io n o f plat f o r m s has b een

enco u r ag ing , led b y t he w illing ness o f co nsu m er s t o t r y new t hing s and t he ease o f g o ing cashless t hr o u g h sm ar t pho nes. The sharing economy as a concept first became popular in India w it h o n- dem and t r anspo r t at io n plat f o r m s. The t r end is no w b eing f o llo w ed b y o t her sect o r s inclu ding ho spit alit y and f o o d & b ev er ag e.

D iagram 2 : S haring economy ecosystem

D emand sid e

S u ppl y sid e S har ing eco no m y pr o v ider s ( ag g r eg at o r s, m ar k et places, t echno lo g y pr o v ider s)

C onsu mers R ising m o b ile ado pt io n •

H ig h int er net penet r at io n •

G r o w t h in dig it al plat f o r m s •

O n- dem and ser v ices •

C o nv enience •

L o w er pr ices •

S har ed ex per iences •

Personalized/customized pr o du ct / ser v ice •

C ho ice o f m u lt iple o pt io ns

D riv ers

•

Benefits

C hal l enges

•

Tr u st and saf et y st andar ds •

C o nsist ent ser v ice ex per ience

A ggregators/ mark etpl aces

S u ppl iers

•

Q u ick m ar k et penet r at io n and hig her r ev enu es •

Better resource utilization

•

H ig h speed int er net av ailab ilit y

•

•

Current inefficiencies in services

E x panded co nsu m er r each and f ast er g o - t o - m ar k et •

Incr eased b u siness du e t o w ider m ar k et r each

•

Increased efficiencies •

B r and cr eat io n

•

D ig it al lit er acy

•

B et t er su pplier pr ices

•

S o cial m o b ilit y

•

L o w er capit al int ensit y

•

S k ill dev elo pm ent •

B r and cr eat io n •

Insu r ance and secu r it y o f asset s •

Inf r ast r u ct u r al challeng es •

C o nsist ent and q u alit y ser v ice ex per ience

•

S t r eam lining o per at io ns •

R eg u lat o r y co nsider at io ns •

M anag em ent o f u nco nv ent io nal w o r k f o r ce •

D eliv er ing co nsist ent ser v ice q u alit y

The Indian landscape

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“ H av ing a g o o d spr ead o f su pply r eady , ensu r ing ser v ice r eliab ilit y , b u ilding t ech plat f o r m s/ pr o cesses t hat enhance t r u st w it h t he st ak eho lder s ar e so m e o f t he cr it ical capab ilit ies t hat o n- dem and ser v ice ag g r eg at o r s sho u ld po ssess t o su cceed in t he m ar k et . ” Nandan Reddy, Co-founder, Swiggy

C o nsu m er s, o n- dem and t echno lo g y plat f o r m s and su pplier s ar e cr it ical elem ent s o f t he shar ing eco no m y eco sy st em , and their effective interaction leads to increased efficiency aimed at achieving better utilization of resources for all the co ncer ned st ak eho lder s as illu st r at ed b elo w . •

Consumers: F r o m t he dem and side, co nsu m er s see numerous benefits such as on-demand services at lower pr ices, co nv inience and v ar iet y o f o pt io ns. •

On-demand technology providers and suppliers: Ther e are increased benifits such as better utilization of inf r ast r u ct u r e, easier access t o w ider cu st o m er b ase and incr eased b u siness o ppo r t u nit ies f o r m icr o - ent r epr eneu r s.

Incr eased dem and f o r g o o ds and ser v ices enab le su pplier s su ch as ho t els and r est au r ant s t o t ap new cu st o m er g r o u ps w ho can access t heir plat f o r m s v ia t he int er net t hat w er e o t her w ise inaccessib le. In o r der t o cr eat e t r u st am o ng co nsu m er s, plat f o r m s m u st ensu r e t heir sy st em s allo w f o r co nsist ent ex per ience t o co nsu m er s and su pplier s t o g r o w t heir b u sinesses.

“ D em o g r aphics and sm ar t pho ne penet r at io n ar e k ey dr iv er s t hat ar e acceler at ing t he ado pt io n and u sag e o f t he shar ing eco no m y at t his po int . India, in t he co m ing y ear w ill b e t he w o r ld’ s seco nd lar g est sm ar t pho ne and m o b ile int er net m ar k et pu shing t he U S t o t he t hir d place. In t er m s o f dem o g r aphics, o v er 5 0 % o f t he po pu lat io n is u nder t he ag e o f 2 5 and o v er 6 5 % u nder t he ag e o f 3 0 . B o t h t hese dr iv er s, in co nj u nct io n, w o u ld m ean m o r e and m o r e Indians w o u ld cho o se no t t o b u y a car and inst ead lo o k at t r anspo r t at io n as a ser v ice at t he t ap o f a b u t t o n r at her t han a pr o du ct sit t ing in t heir g ar ag e. ”

Arvind Singhatiya, Vice-President, Corporate affairs, Ola Cabs

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1.1 Landscape of the sharing economy W hile new sect o r s lik e healt h car e, g r o cer ies, handy m an ser v ices, co m m er cial t r u ck s ag g r eg at io n et c hav e m em b er s j o ining t he shar ing eco no m y , t he hig hest ado pt io n r at es ar e seen in t hese t hr ee indu st r ies: t r anspo r t at io n, ho spit alit y and f o o d & b ev er ag es

r est au r ant - g o er s and f acilit at ing acceler at ed deliv er y . These b u sinesses ar e m ak ing f o o d deliv er y and pay m ent m o r e efficient. Success in these models is anchored on its userfriendly interface, comprehensive and verified listings, updated inf o r m at io n and analy t ics t o m o r e ef f ect iv ely m at ch su pply w it h dem and. C o m panies act iv e in t his sect o r inclu de S w ig g y , F o o d P anda, Tiny O w l and Z o m at o .

Transportation

C o m par ed t o “ t r adit io nal” m ar k et s’ , t he o n- dem and shar ing eco no m y , f acilit at ed b y t echno lo g y plat f o r m s, o f f er s t he f o llo w ing u niq u e at t r ib u t es:

The m o st pr o m inent ex am ples in t he t r anspo r t at io n sect o r ar e o n- dem and t echno lo g y ag g r eg at o r s su ch as U b er and O la. These services allow consumers to connect with a verified near b y dr iv er u ser s w illing t o dr iv e t hem t o t heir dest inat io n f o r r at es set b y t he ser v ice.

•

M ore su stainab l e u se of id l e and u nd er- u til iz ed resou rces •

D e- central iz ed ex change, l ead ing to cost red u ctions •

A l ternativ e pricing mod el s su ch as d ynamic pricing

The shar ing eco no m y m ay also chang e o t her aspect s o f t he t r anspo r t at io n m ar k et . E m er g ing car - po o ling plat f o r m s hav e em er g ed as an alt er nat e t o b o t h car o w ner ship and car r ent als, by offering convenience and flexibility. S im ilar ly t his co ncept is b eing applied t o int er / int r a- cit y logistics and movement of goods, thereby, organizing a highly f r ag m ent ed t r anspo r t at io n sect o r and ensu r ing cu st o m er s enj o y a sw if t , sim ple and sm ar t er o n- dem and ser v ice. O w ner s/ dr iv er s o f t r adit io nal asset s su ch as t r u ck s and t em po s dr iv er s no w enj o y incr eased, m o r e pr edict ab le and su st ainab le ear ning s.

Hospitality (peer to peer accommodation) N ew b u siness m o dels ar e allo w ing t r av eller s t o f o r g o t r adit io nal ho t els in f av o u r o f r ent ing new o pt io ns lik e spar e rooms and homes. Airbnb, Stayzilla and OYO rooms are among so m e o f t he plat f o r m s f o r acco m m o dat io n cu r r ent ly pr esent in India.

“ A s m o r e Indians b eg in t o em b r ace ser v ices o f f er ed b y t he shar ing eco no m y , w e see t he sect o r g r o w ing b y leaps and b o u nds in t he nex t f ew years. Trust must be achieved as a first st ep b u t m o r e and m o r e Indians ar e em b r acing ser v ices su ch as r ideshar ing b ecau se t he t echno lo g y has m ade it m o r e r eliab le, af f o r dab le and saf e. W e w ill see m o r e play er s ent er t he Indian market just by virtue of its sheer size and po t ent ial. ”

Food and beverage (F&B) The F & B b u siness is t ak ing adv ant ag e o f o n- dem and t echno lo g y plat f o r m s b y cem ent ing t he g ap b et w een

Bhavik Rathod, General Manager Bangalore, Uber India


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1.2 Economics of the sharing economy

A s eco no m ies g r o w , so do t he nu m b er o f po t ent ially , m u t u ally beneficial trades. The problem is that we cannot access all o f t hem . W hen t r ansact io n co st s ar e t o o hig h, m any o f t hese exchanges are rendered “unprofitable” and will not take place.

R ecent ly , inno v at iv e o n- dem and t echno lo g ies hav e significantly reduced transaction costs of exchange of goods and ser v ices. They hav e do ne t his b y m ak ing k no w ledg e inex pensiv e and u b iq u it o u s. C o m b ining t his w it h inno v at iv e software platforms, it has significantly extended the ability to co o r dinat e eco no m ic ex chang es.

1.2.2 Dynamic pricing

1.2.1 Transaction costs The r edu cing t r ansact io n co st s ar ising f r o m new t echno lo g ies hav e had a deep im pact o n t he w ay indiv idu als u nder t ak e eco no m ic ex chang e. Tr ansact io n co st eco no m ics f o cu s o n m ak ing t he t r ansact io n– r at her t han co m m o dit ies, w hich ar e t he b asic u nit o f analy sis and by assessing governance structures, of which firms and m ar k et s ar e t he leading alt er nat iv e, in t er m s o f t heir capacit ies to economize on transaction costs. A workable concept of t r ansact io n co st s can b e split int o t hr ee m ain par t s: •

S ear ch and inf o r m at io n co st s •

B ar g aining and decisio n co st s •

G o v er nance and enf o r cem ent co st s

The im po r t ance o f t r ansact io n co st s is b est illu st r at ed t hr o u g h an ex am ple. Y o u m ay b e w illing t o pay so m eo ne IN R 1 0 0 t o w alk do w n t he st r eet and pu r chase a co f f ee. Ther e m ay also b e ano t her indiv idu al w ho is w illing t o u nder t ak e t he t ask f o r IN R 5 0 . Ther e is clearly potential for a mutually beneficial t r ade her e. The r easo n w hy t his m ay no t o ccu r is t r ansact io n co st s — it is lik ely t o t ak e t im e, and po t ent ially m o ney , t o disco v er w ho t he o t her indiv idu al is, b ar g ain a pr ice w it h t hem ( so m ew her e b et w een IN R 5 0 and IN R 1 0 0 ) , and enf o r ce t he ag r eem ent . In t his scenar io , t r ansact io n co st s “ eat u p” the profitability of exchange, preventing mutually beneficial trade from taking place.

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W it h less co st ly and ex panded inf o r m at io n, w e can lev er ag e m ar k et m echanism s and m at ch dy nam ic su pply and dem and m o r e accu r at ely . M ar k et s co o r dinat e k no w ledg e t o m at ch su pply and dem and. The shar ing eco no m y is ab le t o im plem ent sev er al no v el m o dels f o r t his pu r po se. This sect io n t o u ches o n a pr o m inent ex am ple – leading t r anspo r t ag g r eg at o r s’ “ dy nam ic” o r “ su r g e” pr icing m o del. This is o nly o ne o f t he m any ex am ples em er g ing in shar ing eco no m y plat f o r m s. O n- dem and t echno lo g y t r anspo r t at io n pr o v ider s m ay char g e peak - t im e v ar iab le f ar es in o r der t o ensu r e t hat peo ple g et ar o u nd r eliab ly . P r ice v ar iat io ns u nder t he dy nam ic pr icing model are determined by an algorithm, which analyzes multiple factors to equalize demand and supply to arrive at a rate that incentivizes driver users to provide services at a time where no o t her ser v ice pr o v ider is w illing t o do so . D y nam ic pr icing is no t dependent o n t he t im e o f t he day , b u t r at her o n t he co ndit io ns at t he po int o f o r ig in. The o b j ect iv e of dynamic pricing is to maximize supply and ensure service pr o v ider s ar e av ailab le t o addr ess ser v ice r eq u est s and hence,

appr o pr iat ely m eet co nsu m er dem ands. D y nam ic pr icing is applied on a location-specific basis depending on the supplydem and r at io at a par t icu lar po int in t im e. The m o m ent t hat the supply and demand ratio equalizes and steadies, dynamic pr icing ends and t he b ase m o del o f pr icing r esu m es. M o r e often than not, consumers are always notified of an increase in pr ice and ar e f u lly inf o r m ed o f t he q u ant u m o f su ch dy nam ic chang e. D y nam ic pr icing m o dels ar e no t lim it ed t o t he t y pe dev elo ped b y t he t r anspo r t ag g r eg at o r s. Tr adit io nally , t he air line and ho t el indu st r ies hav e u sed su pply and dem and m et r ics t o r aise and lo w er pr ices acco r ding ly . E v er r ecall pay ing hig her pr ices o n ho liday w eek ends o r w hen space b eco m es lim it ed? A no t her r ecent ex am ple is A ir b nb . E ar ly in t heir dev elo pm ent , o ne o f t he leading g lo b al acco m m o dat io n ag g r eg at o r s disco v er ed t hat list ing a “ space” w as a r elat iv ely easy pr o cess until the potential hosts had to pick a price. It set out to fix this pr o b lem t hr o u g h a ser ies o f alg o r it hm s. The co m pany no w pr o v ides pr ice r eco m m endat io ns t o ho st s o n a m o del b ased o n lo cat io n, lik eness and an idea t hat it descr ib e as “ r ecency ” . These pr ice r eco m m endat io ns also inclu de t em per at u r e as a pr o x y f o r seaso nal pat t er ns o f b o o k ing b ehav io r . S o lu t io ns t cu r r ent ly b t he w o r ld. necessar y

“ The shar ing eco no m y has b r o u g ht in efficiency and service quality that co nsu m er s hav e no t b een ex per iencing ear lier . B ef o r e t he em er g ence o f ser v ice ag g r eg at o r s, cu st o m er s u sed t o g et char g ed do u b le f o r a r ide. That has no w chang ed t o pay ing as per utilization after the emergence of ag g r eg at o r s and t he t echno lo g y - b ased plat f o r m s, w hich also enab le t he dr iv er u ser s t o g et t he nex t co nsu m er f r o m near the end point of the first ride.”

Aprameya RadhaKrishna, Former co-founder, TaxiForSure

o m ar k et - b ased issu es o f dy nam ic pr icing ar e eing t est ed in shar ing eco no m y plat f o r m s acr o ss These m o dels ar e all po ssib le du e t o u b iq u it o u s and k no w ledg e.


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Impact and benefits of the shar ing eco no m y

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T

he sharing economy provides several benefits across all the eco sy st em st ak eho lder s, inclu ding t he co nsu m er , seller / ent r epr eneu r and t he plat f o r m . The shar ing eco no m y has b o o st ed t he ent r epr eneu r ial spir it and t he plat f o r m s ar e co nv er t ing inno v at iv e ideas int o

disruptive businesses. Better resource utilization, social mobility through new jobs, flexibility to operate at one’s co nv enience and sk ill dev elo pm ent ar e so m e o f t he im po r t ant benefits that come to the fore during discussions with st ak eho lder s in t he shar ing eco no m y .

J o b cr eat io n R eso u r ce u t iliz at io n

S o cial m o b ilit y

Impact of the sharing economy on society

S k ill dev elo pm ent

D ig it al lit er acy

C o nv enience

E nv ir o nm ent and inf r ast r u ct u r e Tr anspar ency and acco u nt ab ilit y


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2.1 Resource utilization Efficient utilization of resources may be attributed to a better m at ching o f t he dem and/ su pply g ap in a par t icu lar seg m ent . The co nsu m er is t he piv o t w hich t he shar ing eco no m y r ev o lv es ar o u nd. W it h t he w o r ld b eco m ing m o r e m o b ile, t he co nsu m er ex pect s all t he inf o r m at io n and ser v ices at t he t ap o f a b u t t o n. O n- dem and inf o r m at io n and ser v ices m at ch t he client ’ s needs quickly, efficiently and conveniently through online platforms.

•

•

On-demand transportation platforms are connecting travellers to drivers in a more efficient manner leading to better utilization of vehicles. •

For instance, a leading on-demand transportation platform in India highlighted that drivers affiliated t o it s net w o r k hav e r epo r t ed hig her nu m b er o f r ides per ho u r and r edu ced idle t im e b et w een t r ip.

H o t el- b o o k ing seg m ent is ano t her indu st r y w her e t he plat f o r m m o del has pick ed u p m o m ent u m since 2 0 1 4 . The ho spit alit y plat f o r m s hav e cr eat ed a w in- w in pr o po sit io n as it allo w s t he sm aller b u dg et ho t els t o incr ease t heir v isib ilit y and im pr o v e o ccu pancy lev els.

•

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R ev enu e is lo st if capacit y is u nu sed in t he ser v ices sect o r . O n- dem and t echno lo g y plat f o r m s help t o t r ansf o r m t he w ay su pplier s r each po t ent ial cu st o m er s b y hav ing t heir su pply accu r at ely m apped t o t he r ig ht dem and. This, in t u r n, increases resource utilization and reduces the possibility of u nso ld inv ent o r y . F o r inst ance, r ideshar ing ser v ices enab le better utilization of cars leading to reduced number of cars on the road, and hotel rooms are better utilized leading to a decr eased r eq u ir em ent f o r new co nst r u ct io n.

O n- dem and t echno lo g y plat f o r m s hav e helped t he r eal est at e indu st r y t o lo w er ho u sing inv ent o r ies due to better utilization of under-construction and ‘ready to move in’ homes in both the rental and b u y er spaces.

•

O n- dem and t echno lo g y plat f o r m s hav e allo w ed t he r est au r ant indu st r y t o cem ent t he g ap b et w een r est au r ant - g o er s and r est au r ant s b y f acilit at ing acceler at ed deliv er y . It s su ccess is anchored on its user-friendly interface, comprehensive and verified listings, updated information and analy t ics t o m o r e ef f ect iv ely m at ch su pply w it h dem and. •

R est au r ant s also t ie u p m u lt iple lo g ist ics ser v ice plat f o r m s f o r t he last - m ile lo g ist ics ser v ices. •

W it h t he incr easing nu m b er o f deliv er y o r der s f r o m ser v ice plat f o r m s, r est au r ant s ar e also ex plo r ing o pt io ns t o r edu ce dine- in spaces as a m easu r e t o b r ing do w n t he o per at io nal co st s.

•

On-demand education technology platforms serve a not-for-profit objective by more efficiently co nnect ing po t ent ial u ser s t o academ ic inst it u t es/ co m panies/ t eacher s t hat w ant t o shar e inf o r m at io n and k no w ledg e. M assiv ely o pen o nline co u r ses ( M O O C s) b ecam e a new and po pu lar co ncept and po t ent ially disr u pt iv e f o r ce in t he ar ea o f edu cat io n. S o o n af t er , v ar io u s w eb sit es began offering content that utilized academic and informative resources more efficiently. •

W it hin India, t his co ncept has seen a pu sh f r o m leading academ ic inst it u t io ns t hat ar e also w o r k ing o n dev elo ping plat f o r m s cat er ing t o t he lar g er po pu lat io ns o f st u dent s.


“We feel the food order service aggregators bring four fold benefits. Due to the inher ent nat u r e o f t heir m o del, t hey help in r eaching o u t t o co nsu m er s f ast er , i. e. g o t o - m ar k et is b et t er ; t hey help r edu ce capex r eq u ir em ent f o r ex pansio n- t hank s t o t heir v ir t u al plat f o r m ; lesser hassles o f m anag ing deliv er y o per at io ns and r elat ed challeng es and t heir t echno lo g y helps im pr o v e co nsu m er ex per ience and sat isf act io n lev els as cu st o m er s g et m o r e v isib ilit y and co nt r o l o v er t heir o r der s. ” Sumeet Yadav, CEO, Nandos India D iagram 3 : S napshot of a l ead ing gl ob al peer- to- peer accommod ation portal

> 1 ,5 0 0 ,0 0 0 W orl w id e l istings

$ $

3

> 4 0 ,0 0 0 ,0 0 0 T otal gu ests

> 2 0 ,0 0 0 A v erage annu al rent earned b y a host

The sharing economy’s contribution to improved utilization b eco m es ev ident w hen o ne lo o k s at t he dat a o f o ne o f t he w o r ld’ s leading peer - t o - peer acco m m o dat io n po r t al. W it hin a sho r t span o f t im e, t he po r t al has g r o w n ex po nent ially and t he nu m b er o f list ing s o n t he po r t al has su r passed t hat o f so m e o f t he leading ho t el chains in t he w o r ld. The po r t al ser v es as a so u r ce o f addit io nal inco m e f o r ho st s list ed o n it s plat f o r m . M o r e im po r t ant ly , t he o ccu pancy r at es o f pr o per t ies list ed o n t he po r t al is m o r e t han 7 0 % , w hich is hig her t han t hat o f leading g lo b al ho t el chains. The co m pany has leveraged technology and prioritized search results for ho st s t o help im pr o v e o ccu pancy lev els o f pr o per t ies list ed o n it s po r t al. 4 L ow personal asset ow nership d riv ing the sharing economy The po pu lat io n and asset acq u isit io n pat t er ns in India ar e v er y dif f er ent f r o m t hat in o t her co u nt r ies. The r easo ns f o r asset acq u isit io n also v ar y in t he t w o eco no m ies. W hile car s ar e o w ned f o r m o r e u t ilit ar ian pu r po ses in t he U S , in India, an

3 “ W her e D o A ir b nb H o st s M ak e t he M o st M o ney ? , ” S m ar t asset w eb sit e, ht t ps: / / sm ar t asset . co m / m o r t g ag e/ w her e- do - air b nb - ho st s- m ak e- t he- m o st - m o ney , accessed 8 O ct o b er 2 0 1 5 ;

> 5 0 0 ,0 0 0 S tays per night

> 7 0 % O ccu pancy of rooms

o w ned car is per ceiv ed as a sy m b o l o f so cial st at u s. A s a r esu lt , per so nal car o w ner ship is v er y lo w co m par ed t o t he o t her m aj o r co u nt r ies su ch as t he U S , t he U K and B R IC co u nt r ies. C ar o w ner ship is co ncent r at ed in m aj o r cit ies and is ex pensiv e w hen o ne co nsider s f u el, m aint enance, t ax and par k ing ex penses.

“ In India, U b er is helping cr eat e t ens o f t ho u sands o f new j o b s, em po w er ing dr iv er s w it h hig her earnings potential and flexible work ho u r s, and pr o v iding m illio ns o f co nsu m er s w it h a saf e, r eliab le and co nv enient m o de o f t r anspo r t . ”

Amit Jain, President, Uber India

4 “ A ir b nb O ccu pancy R at es C at ching u p w it h H o t els, ” B ey o ndpr icing w eb sit e, ht t ps: / / b lo g . b ey o ndpr icing . co m / sf - o ccu pancy - m at ches- ho t els, accessed 8 O ct o b er 2 0 1 5 ;


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D iagram 4 : C ar ow nership in sel ect cou ntries5

‘000 inhabitants

2 0 1 0

8 0 7

5 1 1

2 1 6

1 2 6

4 4

1 2

2 0 1 5

9 3 0

6 0 2

3 8 8

2 2 1

1 8 7

7 2

S o u r ce: S k o lk o v o Inst it u t e o f E m er g ing M ar k et S t u dies

C o nsider ing lo w car o w ner ship r at es in India and t he f act t hat em er g ing t r anspo r t at io n o n- dem and plat f o r m s in India o f f er air co ndit io ned, hig h- q u alit y r ides f o r f ar es u nder IN R 1 5 / km (US$0.23/km), utilizing the services of transportation plat f o r m s t u r ns o u t t o b e m o r e eco no m ical. The shar ing eco no m y enab les a b r o ad seg m ent o f t he po pu lat io n t o der iv e benefits of travelling comfortably, without having to own cars. Ther ef o r e, shar ing eco no m y , g iv es peo ple in India t he opportunity to experience the benefits of these assets without o w ning t hem , u pg r ading liv ing st andar ds b y u se o f shar ed r eso u r ces and pr o v iding g o o ds and ser v ices t hat w o u ld b e o t her w ise u naf f o r dab le. A co m m o n m y t h asso ciat ed w it h t w ill r eplace o w ner ship o f asset s. C o f per so nal asset s in India, co nsu m new pr o du ct s. A s penet r at io n o f m

he shar ing eco no m y o nsider ing t he lo w o er s w ill co nt inu e t o o der n co nsu m er pr

incr eases w it h t he g r o w ing m iddle class, o w ner ship o f per so nal asset s is also lik ely t o g r o w in India. H o w ev er , t he shar ing economy will ensure improved utilization of those assets.

2.2 Job creation The shar ing eco no m y has incr eased j o b o ppo r t u nit ies in India. G iv en t he asset - lig ht nat u r e o f t he shar ing eco no m y , plat f o r m s ar e ab le su pplier s t o t heir plat f o r m s m o r e q u ick ly t han t r adit io nal indu st r ies. The em er g ence o f t he shar ing eco no m y has m ade t he r o ad t o self - em plo y m ent easier and m o r e peo ple ar e t u r ning ent r epr eneu r s. This t r anslat es t o incr eased inco m e f o r st ak eho lder s in t he shar ing eco no m y .

is t hat it w ner ship b u y o du ct s

D iagram 5 : J ob potential of the sharing economy6

1 ,5 0 0 N u m b er o f dr iv er s o nb o ar ded daily b y an Indian t ax i ag g r eg at o r

1 mil l ion J o b s t o b e g ener at ed b y t he g lo b al shar ing eco no m y b y 2 0 1 6

5 0 ,0 0 0 N ew j o b s cr eat ed per m o nt h b y a leading t ax i ag g r eg at o r g lo b ally

5 “ India’ s passeng er v ehicle and t w o - w heeler m ar k et st eer t o w ar ds a do u b le dig it g r o w t h: R epo r t , ” The E co no m ic Tim es w eb sit e, w w w . eco no m ict im es. indiat im es. com/articleshow/44989399.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst, accessed 7 O ct o b er 2 0 1 5 ; 6 “ H o w S har ing E co no m y J o b s S t ack U p A g ainst Tr adit io nal O nes, ” Inc. w eb sit e, w w w . inc. co m / lau r a- m o nt ini/ inf o g r aphic/ t he- u nco llar ed- w o r k er - and- t he- f u t u r e- o f w o r k . ht m l, accessed 1 O ct o b er 2 0 1 5 ; “ U b er Is Inv est ing $ 1 B To G r o w It s B u siness In India To 1 M lf b v ps: m W y k , accessed 1 O ct o b er 2 0 1 5 ;

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R ides P er D ay , ” Techcr u nch w eb sit e, ht t p: / / t echcr u nch. co m / 2 0 1 5 / 0 7 / 3 1 / o ne- b illllllllllllio n/ # .

D iagram 6 : R ol e of sharing economy in promoting entrepreneu rship

7 ,5 0 0

$ 2 8 mil l ion

shar ing plat f o r m s g lo b ally

inv est ed in shar ing eco no m y st ar t u ps daily

8 0 %

3 7 %

shar ing eco no m y st ar t u ps see cr o w df u nding as t he b est w ay t o r aise capit al

shar ing eco no m y st ar t u ps ar e V C f u nded S o u r ce: C o m par e and shar e - 2 0 1 5 , C r o w d co m panies - 2 0 1 4

O n- dem and t echno lo g y plat f o r m s ar e cr eat ing a m assiv e o ppo r t u nit y t o em plo y deliv er y asso ciat es, dat a co llect o r s and sales ag ent s acr o ss dif f er ent g eo g r aphies w it hin India. These r elat iv ely less- sk illed ar eas o f w o r k ar e cr eat ing em plo y m ent o ppo r t u nit ies f o r m any Indians t o ear n t heir liv eliho o ds.

U b er in India has ent er ed int o a par t ner ship w it h t he G o v er nm ent o f Telang ana w hich enab les j o b cr eat io n. •

The co m pany has also sig ned a m em o r andu m o f u nder st anding ( M o U ) w it h t he G o v er nm ent o f Tam il N adu w hich w ill lead t o t he cr eat io n o f 3 0 , 0 0 0 ent r epr eneu r ial o ppo r t u nit ies f o r dr iv er s, inf r ast r u ct u r e dev elo pm ent and dev elo pm ent o f pr o g r am s t o im pr o v e t echno lo g y . •

A no t her Indian plat f o r m has sig ned a M o U w it h an inv est ee co m pany o f N at io nal S k ill D ev elo pm ent C o u ncil ( N S D C ) and A u t o m o t iv e S k ills D ev elo pm ent C o u ncil f o r t r aining , sk ill dev elo pm ent and em po w er m ent o f 5 0 , 0 0 0 w o m en dr iv er s o n it s plat f o r m . •

The co m pany has also ent er ed int o a par t ner ship w it h The D ir ect o r at e G ener al R eset t lem ent ( D G R ) u nder t he M inist r y o f D ef ence t o ex t end an o ppo r t u nit y f o r ex - ser v icem en t o t u r n ent r epr eneu r s o n it s plat f o r m .

“ B y em po w er ing t he ho t el par t ner s and enhancing t heir b u siness, w e hav e cr eat ed j o b s indir ect ly . I b eliev e w e hav e m ade a g r eat po sit iv e im pact w hich has created employment in various fields f r o m ho spit alit y t o ho t el m anag em ent . ”

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Ritesh Agarwal, Founder & CEO, OYO Rooms


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2.3 Social mobility The shar ing eco no m y has t r ansf o r m ed t he em plo y m ent m ar k et to the benefit of millions of workers. It is empowering a new class of micro-entrepreneurs who are financially rewarded for shar ing t heir ex per t ise, r eso u r ces and ser v ices. It has led t o a hik e in inco m e lev els o f t he indiv idu als, especially t ho se in t he lo w so cio - eco no m ic seg m ent . O ne o f t he im po r t ant r easo ns t hat t hese plat f o r m s help in cr eat ing j o b s is b y enco u r ag ing sect io ns o f t he po pu lat io n w ho w o u ld o t her w ise no t hav e j o ined t he sect o r , t o b eco m e a par t o f it . H o w ev er , no w w it h t hese plat f o r m s init iat ing a par adig m shif t and o v er co m ing t he st r u ct u r al o b st acles in t he indu st r y t hat pr ev ent ed o r pr eclu ded ent r y int o t he sect o r , t he nu m b er o f peo ple o pt ing t o w o r k in t his sect o r has incr eased dr ast ically . The pr ev alent w ag es in t his sect o r hav e b een r epo r t ed t o b e co m par ab le t o t ho se paid t o w o r k ing in pr o f essio nal indu st r ies in o t her sect o r s su ch as g o v er nm ent em plo y ees and so f t w ar e pr o f essio nals. In addit io n t o pr o v iding addit io nal inco m e t o peo ple, t he sharing economy provides workers with more flexibility and autonomy. Transportation platforms have offered flexibility to dr iv er s t o o per at e acco r ding t o t heir o w n co nv enience. In t he ho spit alit y seg m ent , shar ing net w o r k s hav e em er g ed, w hich allo w peo ple t o r ent - o u t t heir ho u ses o r u nu sed r o o m s t o g u est s and m ak e m o ney . F u r t her m o r e, t he shar ing eco no m y provides individuals the flexibility to work with multiple plat f o r m s and no t b e t ied t o o ne par t icu lar plat f o r m . This o pens u p addit io nal o ppo r t u nit ies f o r t he par t icipant s in t he shar ing eco no m y .

In India, o n- dem and t r anspo r t at io n plat f o r m s ar e pr o v iding dr iv er s m o r e lu cr at iv e alt er nat iv es t o f u ll- t im e salar ies. The lau nch o f au t o - r ick shaw plat f o r m s has also helped t o im pr o v e t he b u siness o f au t o – r ick shaw dr iv er s. A t t he g lo b al lev el, a st u dy b y a leading ho m eshar ing po r t al f o u nd t hat m o r e t han 1 0 , 0 0 0 o f it s ho st s ar e u sing t he r ent al inco m e t hey ear n t o su ppo r t t hem selv es w hile lau nching a new b u siness.

7

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The addit io nal inco m e g ener at ed b y t he shar ing eco no m y incr eases t he spending / pu r chasing po w er o f t he indiv idu als. The shar ing eco no m y enab les indiv idu als t o t ak e ent r epr eneu r ial r isk s t hey w o u ld no t o t her w ise co nsider and m o v e u p t he so cial ladder . The ent r y o f plat f o r m s w ill b e a social benefit by introducing members of the lower social strata to the latest technology and also by familiarizing them w it h E ng lish, w hich w o u ld incr ease t heir o v er all em plo y m ent 7 and so cial pr o spect s. The ag g r eg at io n co m m u nit y is f o r m ing cr o ss- par t ner ships w it h m any st ar t - u ps t o f u r t her add f u nct io nalit y and ancillar y ser v ices t o t heir plat f o r m s. F o r inst ance, a r est au r ant plat f o r m has t ied u p w it h a leading t r anspo r t at io n plat f o r m t o pr o v ide seam less cab ser v ices t o it s dining plat f o r m . V er t ical ex pansio n o f capab ilit ies w it hin lar g er plat f o r m s is pr o v iding b u dding entrepreneurs a very real opportunity to add value and fill po t ent ial g aps in ser v ices.

2.4 Skill development The shar ing eco no m y , b y it s v er y nat u r e, allo w s peo ple to better utilize their skills and talents. Technological im pr o v em ent int r o du ced b y plat f o r m s has led t o t he im pr o v em ent in t echno lo g y sk ills o f t he u nsk illed w o r k f o r ce. O n- dem and t echno lo g y plat f o r m s hav e also led t o t he ado pt io n and u se o f E ng lish b y t he u nsk illed w o r k f o r ce f o r ce. These b u siness m o dels ar e inco r po r at ing init iat iv es t o t r ain t heir w o r k f o r ce so t hat t hey can co m f o r t ab ly u se t he t echno lo g y t o efficiently run their businesses. In addition to boosting the technology skills of the unorganized w o r k f o r ce, t he leading t r anspo r t at io n plat f o r m s ar e inv est ing in im pr o v ing t he b ehav io r al sk ills o f dr iv er u ser s. F u r t her m o r e, o ne o f t he o n- dem and t echno lo g y t r anspo r t at io n plat f o r m s in India has par t ner ed w it h co aching inst it u t es t o help t he childr en o f it s dr iv er u ser s t o per f o r m b et t er in b o ar d ex am s. A s a r esu lt , t he plat f o r m s also co nt r ib u t es in t he sk ill dev elo pm ent o f t he ser v ice- pr o v ider s and t heir dependent s, w hich can lead t o a m u lt iplier ef f ect in sk ill dev elo pm ent . In t he ho t el space, t he plat f o r m s pr o v ide ser v ice t r aining f o r ensu r ing standardized quality to customers across its properties.

F o r t he pu r po ses o f t his r epo r t em plo y m ent m ay inclu de ent r epr eneu r s, and self em plo y m ent .


2.5 Convenience C o nv enience is a m at er ial incent iv e f o r cu st o m er s t o ado pt ser v ices pr o v ided in t he shar ing eco no m y . The shar ing eco no m y is co nv enient f o r b o t h t he co nsu m er and t he ser v ice pr o v ider . It pr o v ides co nsu m er s w it h co nv enient and co st efficient access to resources and to access various services w it h a f ew t aps o n t heir sm ar t pho nes. The sharing economy is also flexible from the perspective of a service provider. Service providers also have flexibility to o per at e acco r ding t o t heir co nv enience. F o r inst ance, in t he t r anspo r t at io n space, t he dr iv er can lo g in t o t he sy st em at any t im e o f t he day . In t he ho t el space, t he plat f o r m s allo w u ser s t o b o o k r o o m s o n t he g o w it ho u t w ait ing f o r a r eply f r o m a ho st , and t hey can check in and o u t inst ant aneo u sly inst ead o f w ait ing at a r eser v at io n desk . C o m m u nit y - b ased m ar k et places allo w peo ple t o r ent / shar e g o o ds su ch as cam er as, co m pu t er s, t ab let s and t r av elling g ear t hat o ne do es no t u se f r eq u ent ly .

display t hat allo w s t r av eller s t o b e inf o r m ed o f any delay s t hat m ay ar ise. P eer - t o - peer acco m m o dat io n sit es enco u r ag e a t w o - w ay r at ing m echanism , w her eb y r ent er s can r at e g u est s and g u est s can rate renters. The most obvious benefit of two-way rating m echanism s in t he shar ing eco no m y is cr eat ing an eco - sy st em o f acco u nt ab ilit y and t r anspar ency b et w een par t ies. 8 The shar ing eco no m y b u siness also im pr o v es t r anspar ency o f b u siness f o r t he t ax au t ho r it ies. S m all seller s o r ser v ice pr o v ider s w ho m ay no t b e t r anspar ent ly pay ing t heir sales t ax o r ser v ice t ax , need t o b e m o r e t r anspar ent , as t r ansact io ns ar e easily t r aceab le t hr o u g h t he plat f o r m and t hu s help in m o r e transparent tax filings by the small aggregated entities.

G o ing f o r w ar d, t he ab ilit y t o access r eso u r ces and ser v ices at any t im e and f r o m any place w ill b e a m aj o r dr iv er t hat w ill at t r act m o r e peo ple t o t he shar ing eco no m y . In addit io n t o co nv enience, b u ilding t r u st is ano t her cr it ical aspect t hat t he st ak eho lder s in t he shar ing eco no m y need t o addr ess t o ensu r e it s w idespr ead ado pt io n.

G lo b ally , a leading peer - t o - peer acco m m o dat io n co m pany is w o r k ing w it h au t ho r it ies t o ensu r e t hat r eg u lat io ns ar e ho no u r ed and t hat it s ho st s ar e aw ar e o f leg al o b lig at io ns and lo cal r eg u lat io ns. •

The co m pany has f o r w ar ded t he det ails o f it s ho st s t o t ax au t ho r it ies and in so m e cases has co llect ed lo cal acco m m o dat io n t ax es o n b ehalf o f t he r espect iv e m u nicipal au t ho r it ies. •

This incr eases t he t r anspar ency and acco u nt ab ilit y and r edu ces t he po ssib ilit y o f u ndeclar ed r ent al inco m e.

2.6 Transparency of business and accountability

•

Techno lo g y has f acilit at ed t r anspar ency and acco u nt ab ilit y b y dev elo ping o pen- ended, u ser f r iendly plat f o r m s t hat pr o m o t e shar ing am o ng u ser s. F o r inst ance, leading r est au r ant plat f o r m s hav e a b r o ad dat ab ase o f r est au r ant s t hat ar e assig ned m ass r at ing s b ased o n it s u ser s’ ex per iences. S im ilar ly , o n- dem and t echno lo g ies hav e cr eat ed a m o r e t r anspar ent r eal- est at e m ar k et in an o t her w ise o paq u e indu st r y b y pr o m o t ing pr ice t r anspar ency am o ng b u y er s and seller s and also b y st r eam lining t he b r o k er ag e pr o cess w hich is otherwise difficult to navigate. Tr anspo r t at io n plat f o r m s hav e int r o du ced m o r e t r anspar ency in pr icing and co nsu m er s ar e g iv en an est im at e o f t he t r ip co st in adv ance. F u r t her m o r e, t hey hav e int r o du ced a r at ing m echanism o n t heir apps w her eb y dr iv er u ser s and u ser s can b o t h r at e each o t her . In addit io n, t hey hav e a pick - u p t im e

8 “Trust and transparency in the new ‘sharing economy’,” Irish Times website, w w w . ir isht im es. co m / b u siness/ t r u st - and- t r anspar ency - in- t he- new - shar ing eco no m y - 1 . 2 3 2 3 0 6 6 , accessed 2 O ct o b er 2 0 1 5 ;


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2.7 Impact on environment and infrastructure

need it , w it ho u t hav ing t o o w n it . F u r t her m o r e, as t her e ar e f ew er v ehicles o n t he r o ad, t his leads t o a r edu ct io n in r o ad m aint enance co st s f o r m u nicipal au t ho r it ies.

A s t r anspo r t at io n plat f o r m s b eco m e m o r e po pu lar , peo ple ar e b eco m ing less dependent o n t heir o w n v ehicles t o g et ar o u nd, r edu cing t he t o t al nu m b er o f car s o n t he r o ad. This creates greater efficiency and has a favorable impact on the env ir o nm ent , as w ell as r edu cing w ear - and- t ear o n pu b lic inf r ast r u ct u r e, leading t o su b st ant ial sav ing s f o r pu b lic co f f er s.

In India, t he passeng er car m ar k et has b een o n an u pw ar d clim b o v er t he last decade. H o w ev er , t he r o ad leng t h ( in av ailab le k m s) , par t icu lar ly in t he m et r o s and t ier - I cit ies is no t g r o w ing co r r espo nding ly . A s a r esu lt , t he phy sical inf r ast r u ct u r e is sev er ely co nst r ained, leading t o f r eq u ent and long traffic jams during peak hours.

G lo b ally , car - shar ing ser v ices hav e co nt r ib u t ed t o r edu ct io n in t r av el co st s and G H G em issio ns. The shar ing eco no m y emphasizes on re-use of assets rather than absolute o w ner ship. P eo ple can u se pr o du ct s/ ser v ices w hen t hey D iagram 7 : Impact of car sharing 9

1 car sharing v ehicl e

repl aces

9 - 1 3 v ehicl es

= 0 .5 8 – 0 .8 4 metric tons

R edu ct io n in g r een- ho u se g as ( G H G ) em issio ns per y ear f o r o ne ho u seho ld

3 4 % -4 1 %

R edu ct io n in G H G em issio ns per y ear f o r o ne ho u seho ld

2 7 % -4 3 %

R edu ct io n in v ehicle m iles t r av elled ( V M T) per y ear , co nsider ing v ehicles so ld and pu r chases po st po ned

S o u r ce: M o b ilit y and t he shar ing eco no m y : im pact sy no psis; S pr ing 2 0 1 5 ; Tr anspo r t at io n S u st ainab ilit y R esear ch C ent er – U niv er sit y o f C alif o r nia, B er k eley st u dy

9 “ M o b ilit y and t he shar ing eco no m y , ” B er k eley U niv er sit y , 2 0 1 5 , p. 2

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asso ciat es, sales ag ent s and r est au r ant m anag er s) asso ciat ed w it h t he shar ing eco no m ies w ill need t o b e co m f o r t ab le w it h t he u se o f sm ar t pho nes and t he int er net . In addit io n, t her e is a pu sh f o r cu st o m er s t o st ar t b eco m ing t ech- sav v y b y u sing su ch apps and nav ig at ing t hr o u g h em b edded f eat u r es su ch as u sing m o b ile w allet s t o pay f o r ser v ices. •

O n- dem and t r anspo r t at io n plat f o r m s co nnect r ider s t o t r av eller s and dr iv er s in a m o r e efficient manner leading to better utilization of v ehicles. •

F o r inst ance, a per so n t r av eling f r o m D elhi t o J aipu r can u se a lo ng dist ance r ideshar ing ser v ice t o lo o k f o r peo ple t r av elling o n t he sam e r o u t e. The r ideshar ing ser v ice co nnect s car o w ner s and co - t r av eller s and as a r esu lt , t he f u el ex penses can b e shar ed b et w een m u lt iple peo ple. •

In addit io n, t he f u el co nsu m pt io n can b e r edu ced w hen m u lt iple peo ple shar e o ne car , inst ead o f o pt ing t o t r av el separ at ely . •

A s a r esu lt , t his leads t o r edu ced nu m b er o f cars on the road, eases traffic congestion and r edu ces f u el em issio ns.

S o m e o f t he plat f o r m s pr o v ide a f r ee sm ar t pho ne t o it s dr iv er u ser s f o r u sing t heir plat f o r m , w hich t hey also u se f o r o t her per so nal act iv it ies inclu ding e- co m m er ce, m o b ile b ank ing , citizen services and bill payments, which also enable inclusion o f m o r e peo ple o n su ch dig it al plat f o r m s.

D iagram 8 : S haring economy and its rol e in d igital l iteracy

S u pplier s ( dr iv er s, deliv er y asso ciat es, et c. ) w it h f eat u r e pho nes

S u pplier s w it h sm ar t pho nes

2.8 Digital literacy The term “Digital Literacy” can be defined as “the awareness, at t it u de and ab ilit y o f indiv idu als and b u sinesses t o appr o pr iat ely u se dig it al t o o ls and t echno lo g y t o ident it y , access, interact, transact, manage, analyze and synthesize dig it al r eso u r ces t o cr eat e o r co nst r u ct new k no w ledg e” . The shar ing eco no m y pr o m o t es dig it al lit er acy b y helping t o b u ild a sk illed, t ech- sav v y w o r k f o r ce b y incr easing f am iliar it y w it h smartphones, financial bank statements, technology and the E ng lish lang u ag e.

U se o f m aps t o nav ig at e

S o cial m edia

E - b ank ing

E - co m m er ce

M o b ile w allet s

C o m panies f acilit at ing t he shar ing eco no m y u se dig it al plat f o r m s t o deliv er t heir pr o du ct s and ser v ices in a seam less m anner . D u e t o t he r eq u ir em ent o f dig it al m edia su ch as m o b ile dev ices, t he ser v ice pr o v ider s ( dr iv er u ser s, deliv er y


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The shar ing eco no m y is also t r ansf o r m ing t he m anner in w hich edu cat io n is co nsu m ed and deliv er ed. Inst it u t io ns ar o u nd t he w o r ld dev elo p inf o r m at iv e m at er ial t hat , in t he b r ick and m o r t ar eco no m y , w as f o cu sed o n j u st a su b set o f t he population leading to its limited utilization. However, as online plat f o r m s f o r shar ing b ecam e po pu lar , su ch m at er ial b ecam e accessib le t o a m u ch b r o ader po pu lat io n t hr o u g h t he int er net . Thus, knowledge sharing and information utilization picks up in a b ig w ay . C o m panies pr o v ide t echno lo g y plat f o r m s t hat allo w any o ne t o set u p and r u n t heir o w n class. The shar ing eco no m y enab les st u dent s t o w at ch v ideo t aped lect u r es and t ak e quizzes online at their convenience. Education platforms or k no w ledg e m ar k et places can pr o v ide a po w er f u l alt er nat iv e t o t he t r adit io nal lear ning ex per ience and m ak es edu cat io nal r eso u r ces m o r e af f o r dab le and r eadily av ailab le. The shar ing eco no m y has a b ig r o le t o play in dig it al lit er acy . F o r dig it al lit er acy t o play a k ey r o le in cr eat ing a su st ainab le ent r epr eneu r ial shar ed ser v ice eco no m y , an at t em pt t o ado pt the following initiatives will be a first step in powering the dig it al eco no m y .

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•

Change ► in employment practices that enhance access, par t icipat io n, m o b ilit y , co m pet it iv eness and pr o du ct iv it y w hile m aint aining so cial pr o t ect io n and w o r k er cer t aint y •

Closing ► the gender gap between male and female em plo y m ent r at es •

Increasing ► fixed-term contracts and temporary em plo y m ent •

Develop ► right skills for the digital economy to r espo nd t o chang e •

Create ► a skills strategy at a country level •

Support ► shared service firms in training and dev elo pm ent pr o g r am s t hr o u g h P P P m o dels •

Engage ► with international organizations to define sk ills and pr o g r am s f o r su ccess in t he dig it al ag e •

Ensure ► coverage of new skills in primary, secondary and t er t iar y edu cat io n r elev ant t o t he k no w ledg e eco no m y •

Defining ► Key Performance Indicators (KPIs) for m easu r ing t alent and sk ill ef f ect iv eness


A ct io n m u st b e t ak en t o ensu r e t hat peo ple ar e appr o pr iat ely skilled and have the capability, flexibility and adaptability to par t icipat e in t he w o r k f o r ce o f t o day and t he w o r k f o r ce o f t he f u t u r e. S pecial co nsider at io n m u st b e g iv en t o act io ns t hat m o t iv at e u nem plo y ed y o u t h and g r o u ps w it h lo w par t icipat io n so t hat t he lar g er po pu lace o r w o r k f o r ce can b e g ainf u lly eng ag ed. India can cr eat e co ndit io ns f o r su ccessf u l and su st ained j o b g r o w t h t hr o u g h ent r epr eneu r s and est ab lished b u sinesses b y enab ling a f air and co m pet it iv e landscape su ppo r t iv e o f pr iv at e sect o r g r o w t h; pr o v iding adeq u at e o r b et t er inf r ast r u ct u r e t o su ppo r t new ent er pr ises and enco u r ag ing b r o ad- b ased t o ler ance f o r f ailu r e. R apidly chang ing t echno lo g y w ill co nt inu e t o im pact t he nat u r e and t y pe o f sk ills r eq u ir ed in t he f u t u r e eco no m y . S cience, Techno lo g y , E ng ineer ing and M at hem at ics ( S TE M ) o ccu pat io ns w ill need f o cu s in t he new eco no m y . B asic sk ill needs w ill b r o aden and ev o lv e f r o m lit er acy and nu m er acy , t o dig it al lit er acy , cr eat iv it y , pr o b lem so lv ing , cr it ical t hink ing and r esilience. The env ir o nm ent is co nt inu o u sly chang ing and pr io r experience and qualifications are no longer relevant or lasting. L if elo ng lear ning , v o cat io nal sk ills and car eer r einv ent io n b eco m es t he no r m . N o t all j o b s in t he new eco no m y w ill r eq u ir e u niv er sit y edu cat io n — appr ent iceships and o n t he j o b sk ills w ill b eco m e m o r e cr it ical and dr iv e t he “ m iddle sk ills” . This w ill require sufficient technical and trade skills. The incr easing r each o f dig it al and m o b ile t echno lo g ies w ill co nt inu e t o enab le o ppo r t u nit ies f o r y o u ng ent r epr eneu r s t o b e cr eat ed and g r o w n o u t side t r adit io nal m ar k et s, and t his in t u r n w ill challeng e m at u r e b u sinesses t o r espo nd w it h sim ilar ent r epr eneu r ial and inno v at iv e ef f o r t s. To b e su ccessf u l, y o u ng ent r epr eneu r s r eq u ir e addit io nal, t ailo r ed su ppo r t in areas such as access to finances, simpler regulatory norms, t r aining and m ent o r ing and f o r u m s f o r co nnect ing w it h o t her b u sinesses. In conclusion, digital literacy will only flourish and be su ccessf u l if t echno lo g y can cr eat e an incr eased im pact o n so cio - eco no m ic pr o cesses t o nar r o w t he dig it al div ide and t he r u r al- u r b an chasm in sk ills, dev elo pm ent , eco no m ic dispar it y , w o r k f o r ce m ig r at io n and ar b it r ag e.

C halleng es and r eg u lat o r y hu r dles f o r t he shar ing eco no m y


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W

hile the benefits provided by the sharing economy ar e innu m er ab le, it s r apid g r o w t h also po ses co m plex challeng es. W inning co nsu m er t r u st is an int eg r al elem ent o f t he shar ing eco no m y , and is cr it ical f o r peer - t o - peer b u sinesses. A s t he shar ing eco no m y m ak es r apid inr o ads int o o u r day - t o - day liv es, pr o t ect ing co nsu m er int er est s w ill b e o f par am o u nt im po r t ance. P eo ple ( co nsu m er s and ser v ice pr o v ider s) need t o t r u st b o t h t he plat f o r m t hey ar e u sing and t he peo ple w it h w ho m t hey ar e co nnect ing .

The inno v at iv e b u siness m o dels enab led b y t he shar ing eco no m y ar e b lu r r ing t he lines b et w een per so nal act iv it ies and pr o f essio nal ser v ices. This has co m plicat ed im plicat io ns o n t ax at io n and r eg u lat o r y co m pliance. A s t hese b u siness m o dels ev eo lv e, t her e w ill b e a need t o est ab lish r eg u lat o r y f r am ew o r k s t hat addr ess t he o per at ing m o dalit ies o f t he eco sy st em .

C onsu mer- sid e

C o nsu m er t r u st and saf et y

B u siness- sid e

S ecu r it y and r isk m it ig at io n

C o nsist ency in ser v ice q u alit y The challeng es f aced b y ser v ice pr o v ider s in a shar ing eco no m y ar e:

3.1 Consumer-side C onsu mer tru st and safety: Tr u st is a pr er eq u isit e f o r any f o r m o f shar ing , w het her it is t o u se ano t her ’ s acco m m o dat io n or get into their car. It can be difficult to build trust with cu st o m er s v ia an o nline plat f o r m as t he t ech- sav v y co nsu m er s o f t o day f o cu s m o r e o n af f o r dab ilit y and co nv enience t han o n b u ilding lo y alt y w it h pr o v ider s o r so cial r elat io nships w it h o t her co nsu m er s. M o r eo v er , lack o f acco u nt ab ilit y in co nsu m er g r iev ances and it s r edr essal is a m aj o r b ar r ier in w inning co nsu m er t r u st .

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R eg u lat o r y co nsider at io ns

Tax co m pliance

M anag em ent o f u nco nv ent io nal w o r k f o r ce F o r t he shar ing eco no m y t o co nt inu e o n it s g r o w t h t r aj ect o r y , businesses will have to find ways to foster trust. Authenticating t he ident it y o f t he ser v ice pr o v ider is a g o o d m easu r e t o b u ild a b asic lev el o f t r u st b et w een st r ang er s b u t t his is m o r e challeng ing in a peer - t o - peer b u siness m o del as co m par ed t o t he b u siness- t o - co nsu m er m o del. F o r ex am ple, no t ev er y o ne eng ag ed in t he shar ing eco no m y ser v ices has a passpo r t t o upload, and they may not have a profile on leading social media sit es. In addit io n, lack o f t r anspar ent r eg u lat io ns m ay lead t o inst ances o f asy m m et r ic inf o r m at io n du r ing t r ansact io ns, i. e. , seller s m ig ht w it hho ld inf o r m at io n ab o u t pr o du ct s o r ser v ices t hat w ill pr ev ent u ser s t o dist ing u ish b et w een g o o d and b ad pu r chases. Ther ef o r e, t r anspar ency t hr o u g h r at ing s and

po sit iv e o nline r ev iew s play s a cr u cial r o le in g aining co nsu m er t r u st and g ener at ing leads.

According ► to Aprameya Radha Krishna, former co - f o u nder , Tax iF o r S u r e, “ E v er y st at e has it s o w n r eg u lat io n w hen it co m es r adio t ax is schem es and so m e st at es enf o r ce t r anspo r t at io n plat f o r m s t o co m ply w it h t he r adio t ax i schem es. S o m e o f t he r adio t ax i r eg u lat io ns do no t m at ch w it h t he need o f cu r r ent t im es su ch as hav ing pr int er s inside t he cab , car r y ing y ello w t ax i b o ar d sig n o n t he t o p o f v ehicle. ” •

For ► instance, all drivers of radio taxis, black and y ello w t ax is and au t o s in M u m b ai hav e b een issued a Public Services Vehicle Authorization b adg e. M aj o r it y o f t he dr iv er s u ser s, w o r k ing w it h t r anspo r t at io n plat f o r m s do no t hav e t he b adg es, which leads to non-compliance of state-specific law s. •

Another ► state transport department has amended it s po licies t o pav e t he w ay f o r t r anspo r t at io n plat f o r m s t o o per at e. A cco r ding t o new r u les, apar t f r o m t he G P S - and G P R S - b ased t r ack ing dev ices, a pr int er and a display panel sho w ing t he pat h t r av er sed and t he t o t al dist ance co v er ed has t o b e inst alled in t ax is. The co lo r o f t he r adio t ax i sho u ld b e w hit e, w it h a co lo r ed st r ip o n b o t h sides o f t he t ax i, pr o m inent ly display ing t he nam e o f t he licensee. Transportation platforms find it difficult t o co m ply w it h t his r eq u ir em ent as car s o n su ch a net w o r k hav e m u lt iple o per at o r s and, t her ef o r e, canno t car r y t he lab el o f o ne ser v ice pr o v ider alo ne.

S ecu rity and risk mitigation: The shar ing eco no m y m o del is f aced w it h m u lt iple challeng es t hat r eq u ir e st r o ng r isk m it ig at io n st r at eg ies in place.

•

The pr o cess f o r so lv ing cu st o m er g r iev ances sho u ld b e w ell defined and responsibilities well established for the consumer, o n t he r elev ent play er s in t he eco - sy st em r espo nsib le f o r t he q u alit y o f pr o du ct s and ser v ices. C onsistency in serv ice q u al ity: The pr essu r e t o m aint ain co nsist ent ser v ice q u alit y is hig h in a shar ing eco no m y m ar k et place as t he lev el o f cu st o m er ser v ice m ay v ar y f r o m place t o place and su pplier t o su pplier . W it h t he r apid im pr o v em ent in t echno lo g y , it m ay b e easy t o b u ild a m ar k et place app, b u t it is no t easy t o pr o v ide co nsist ent hig h- q u alit y ser v ices and scale it acr o ss m u lt iple lo cat io ns. The ser v ice pr o v ider s hav e t o k eep u p t o t he co nsu m er ex pect at io ns o f a su per io r ex per ience at all t o u ch- po int s ev er y sing le t im e. F o r ex am ple, a u niq u e ex per ience ho lds eq u al im po r t ance as ser v ice q u alit y in t er m s o f appeal o f t he shar ing eco no m y in ho spit alit y .

3.2 Business-side R egu l atory consid erations: The t r adit io nal indu st r ies o per at e under the influence of regulations placed by the GoI. However, w it h t he em er g ence o f t he shar ing eco no m y b u siness m o dels, t her e m ay b e a need t o r e- ex am ine t he r eg u lat io ns ar o u nd them and sepcifically address the requirements of each su b - seg m ent o f t he shar ed eco - sy st em . F o r ex am ple, w hile r eg u lat io ns ar e in place f o r t r adit io nal t ax i o per at o r s, m o st Indian states do not have specific regulations covering ondem and t r anspo r t at io n plat f o r m s. 1 0 W hile t he G o I has enact ed g u idelines t hat lim it t he liab ilit y o f int er m ediar ies1 1 , m any plat f o r m s f eel t hat g o v er nm ent s and r eg u lat o r s m u st clar if y t he applicab ilit y o f t hese r u les t o v ar io u s sect o r s w it hin t he sharing economy. In a welcome first step, the recent advisory issu ed b y t he M inist r y o f R o ad and Tr anspo r t , G o v er nm ent o f India has issued advisory guidelines to states that specifically lo o k at r eg u lat ing o n- dem and t r anspo r t at io n plat f o r m s. 1 2

1 0 S t at e’ s M o t o r V ehicles r eg u lat io ns 1 1 Int er m ediar y L iab ilit y R u les, 2 0 1 1 , 1 2 C lau se 1 . 2 , A dv iso r y f o r licensing , co m pliance and liab ilit y o f o n dem and inf o r m at io n t echno lo g y b ased t r anspo r t at io n ag g r eg at o r ( Tax is 4 + 1 ) o per at ing w it hin t he j u r isdict io n o f India, M inist r y o f R o ad Tr anspo r t and H ig hw ay s, G o v er nm ent o f India dat ed 8 t h O ct o b er , 2 0 1 5 .


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A s t he eco - sy st em g r o w s, t he r eg u lat o r y po licies sho u ld b e ag ile t o k eep pace w it h t he r apidly chang ing t echno lo g ies. In cr o w df u nding , f o r inst ance, a v ent u r e is f u nded b y r aising sm all am o u nt s o f m o ney f r o m a lar g e nu m b er o f peo ple, t y pically t hr o u g h an int er net - b ased plat f o r m . The Indian co r po r at e law r eg u lat io ns r eq u ir e a co m pany t o g o t hr o u g h t he pu b lic o f f er pr o cess f o r r aising f u nds f r o m m o r e t han 2 0 0 inv est o r s, ev en w her e t he am o u nt s inv o lv ed ar e sm all. 1 3 A no t her ex am ple is t he lack o f clar it y o n f ar es ar o u nd dy nam ic pr icing ado pt ed b y t r anspo r t at io n plat f o r m s, w hich b r ing s t heir o per at io ns u nder r eg u lat o r y scr u t iny . M anaging the u nconv entional w ork force: The last t w o decades hav e r eco r ded a st r u ct u r al shif t in t he w ay w e w o r k . The t r adit io nal em plo y er - em plo y ee r elat io nship has ev o lv ed. The shar ing eco no m y is dr iv ing t his f u ndam ent al shif t as it r elies heav ily o n sho r t - t er m , elast ic em plo y m ent , r at her t han t r adit io nal st ab le em plo y m ent . Indiv idu als r ender ing ser v ices t hr o u g h t he shar ing eco no m y plat f o r m s par t icipat e as independent co nt r act o r s, self - em plo y ed o r f r eelancer s. Adequate background verification, training and skilling of this w o r k f o r ce is im per at iv e f o r t he su ccessf u l deliv er y o f ser v ices du e t o t he co nsu m er - f acing nat u r e o f t he b u sinesses. F o r inst ance, an o nline edu cat io n plat f o r m pr o v ider has a m u lt it ier r ev iew and o n- b o ar ding pr o cess t hat inclu des r ef er ences, optional background checks and verification of social media acco u nt s, o nline t r aining and ex am s and a m anu al r ev iew t hat det er m ines w het her ev er y candidat e has t he ex per ience t o m aint ain an appr o pr iat e lev el o f cu st o m er ser v ice. D istinction b etw een empl oyee and ind epend ent contractor: The pr im ar y dist inct io n b et w een t he shar ing eco no m y and t r adit io nal indu st r ies is t hat t he shar ing eco no m y do es no t o w n o r dir ect ly em plo y peo ple t o pr o v ide g o o ds and ser v ices. A lt er nat iv ely , t he shar ing eco no m y pr o m o t es m icr o - ent r epr eneu r s t o lev er ag e t heir plat f o r m s f o r g ain. Independent co nt r act o r s also hav e t he ab ilit y t o o per at e in t heir o w n t im e and ar e no t b o u nd b y t im ing r est r ict io ns. A cceptance of d ynamic pricing: A s t he shar ing eco no m y is dependent o n m aint aining a st eady su pply st r eam t o m eet it s dem and, dy nam ic pr icing is an ef f ect iv e w ay f o r m ar k et par t icipant s t o ensu r e a su pply o f ser v ice.

Insu rance: O n- dem and t r anspo r t at io n plat f o r m s hav e specifically expressed challenges to India’s insurance r eg u lat io ns w hen co m par ed t o m o st o t her j u r isdict io ns in t he w o r ld. 1 .

Insu r ance r at es and co nt r act s ar e b o t h pr e- det er m ined under regulations and there is no flexibility or scope for neg o t iat io ns.

2 .

A ny new insu r ance pr o du ct w ill also hav e t o b e appr o v ed b y t he r eg u lat o r .

3 .

P eer - t o - peer ( P 2 P ) r ideshar ing b eco m es co m plicat ed t o im plem ent in t he f ace o f t his r eg u lat o r y u ncer t aint y . This is b ecau se t he M o t o r V ehicles A ct do es no t per m it pr iv at e v ehicles f r o m ply ing o n “ hir e o r r ew ar d” . If any v ehicle w er e t o do so , t he insu r ance po licy asso ciat ed w it h su ch v ehicle is deem ed v o id ab init io .

4 .

F u r t her m o r e, as t he t er m “ hir e o r r ew ar d” is no t specifically defined, any vehicle that only charges the b asic co st f r o m a passeng er f o r a r ide, also f aces t he r isk o f it s insu r ance po licy no t b eing ho no r ed b y an insu r ance co m pany .

5 .

This sit u at io n is co m po u nded b y t he f act t hat ply ing any v ehicle w it ho u t appr o pr iat e insu r ance is a pu nishab le o f f ence u nder t he M o t o r V ehicles A ct .

N ew technol ogy: C o m panies in t he shar ing eco no m y st r o ng ly b eliev e t hat t he G o I m u st r eplace so m e o f t he ex ist ing law s law s and r eg u lat io ns im pact ing t he shar ing eco - sy st em and allo w f o r lat est t echno lo g ies t o pr o sper in t he sect o r . F o r ex am ple, t he law st at ing t hat each t ax i m u st hav e a phy sical pr int er t o issu e inv o ices t o cu st o m er s at t he end o f t he t r ip m ay b e r eplaced w it h sm ar t pho nes and em ail inv o ices t o cu st o m er s. T ax compl iance: The st r u ct u r e o f shar ing eco no m y b u siness m o dels has ser io u s im plicat io ns f o r t he co m pliance enf o r cem ent o f co nsu m pt io n t ax es. The shar ing eco no m y eco sy st em inv o lv es pr o v ider s o f g o o ds and ser v ices t hat o per at e o n t hin m ar g ins u se per so nal pr o per t y f o r b u siness pu r po ses, and w ho ar e u nf am iliar w it h t he challeng es associated with filing and reporting independent contractor

1 3

“ S ect io n 4 2 o f t he C o m panies A ct , 2 0 1 3 , ” M inist r y o f C o r po r at e A f f air s w eb sit e, ht t p: / / w w w . m ca. g o v . in/ M inist r y / pdf / C o m paniesA ct 2 0 1 3 . pdf , accessed 6 O ct o b er 2 0 1 5 ; “ C o m panies( P r o spect u s and A llo t m ent o f S ecu r it ies) , R u les 2 0 1 4 , ” IC S I w eb sit e, ht t p: / / w w w . icsi. edu / po r t als/ 0 / P R O S P E C TU S % 2 0 & % 2 0 A L L O TM E N T. pdf , accessed 6 O ct o b er 2 0 1 5 ;

26


inco m es. Ty pically , o n- dem and t r anspo r t at io n plat f o r m s o nly b r ing t he co nsu m er and t he ser v ice pr o v ider t o g et her , t he act u al ser v ice deliv er y is f r o m t he ser v ice pr o v ider t o t he co nsu m er . In t his co nt ex t , t he t ax au t ho r it ies had r aised q u est io ns r eg ar ding t he per so n liab le t o dischar g e t he ser v ice t ax o n t he ser v ices deliv er ed. The F inance A ct 2 0 1 5 has no w int r o du ced pr o v isio ns u nder w hich t he plat f o r m is r eq u ir ed t o dischar g e t he ser v ice t ax liab ilit y o n t he ser v ices pr o v ided b y t he ser v ice pr o v ider s. 1 4 W hile t his has pr o v ided so m e clar it y o n t ax at io n f o r o n- dem and t r anspo r t at io n plat f o r m s, so m e issu es st ill r em ain u naddr essed inclu ding cr edit lo ss t o t he v endo r s.

“Insurers are still trying to figure out a w ay t o st r u ct u r e and pr ice t heir pr o du ct s f o r t he shar ed eco no m y . This m ak es t ech and analy t ics a k ey co m pet it iv e adv ant ag e f o r ag g r eg at o r s b y helping t hem select t heir v endo r s and customers and incentivize good b ehav io r . ”

“ S er v ice t ax im plicat io ns o n ag g r eg at io n is a challeng e, w it h incidence o f t ax at t he po int o f co llect io n. H o lding m o nies in escr o w can b e deem ed inco m e, and pr o v ing t hat is o nly pass t hr o u g h is cu m b er so m e. S o w hile lar g e co m panies have figured it out, the smaller startups su f f er w it h a lack o f clar it y , and u nnecessar y delay dealing w it h t he law s law s o f t he land. ”

Arjun Baljee, Founder and CEO, Stayology

Vishal Dixit, Managing Director, Mayfield Advisors

1 4

“Notification No 5/2015 dated 1 March 2015- Service Tax,” Central Board of Excise and Customs website, ht t p: / / w w w . cb ec. g o v . in/ r eso u r ces/ / ht do csservicetax/st-notifications/st-notifications-2015/st05-2015.pdf;jsessionid=2381E08677BE8529FB4BAE1D7A7A9FD7; accessed 6 O ct o b er 2 0 1 5 ;


27

3.3 Addressing the regulatory hurdles associated with the sharing economy

E stab l ishing strategic operating framew ork Establishing ► a strategic operating framework that co nt em plat es k ey co nsider at io ns and enab les t he G o I t o take specific policy decisions, evaluate those decisions and m ak e m id- co u r se adj u st m ent s •

This ► framework could be based on a cross-jurisdictional co m m it t ee w it h r epr esent at io n f r o m G o I, t ho u g ht leader s, and indu st r y ( inclu ding ex ist ing o per at o r s and new m ar k et ent r ant s) w it h a m andat e t o analy se t he o ppo r t u nit ies and im pact s o f t he shar ing eco no m y o n t he eco no m y o f t he st at e and m ak e co m pr ehensiv e r eco m m endat io ns t o help t he st at e g o v er nm ent pass adeq u at e r eg u lat io ns •

Creating ► increased clarity for workers and users of the shar ing eco no m y b y pr o v iding a ho w - t o g u ide o n t ax co m pliance

To realize the full potential of the sharing economy, there is a need that workforce markets, finance markets and the laws of contract are flexible and adaptable. The sharing eco no m y co m panies b eliev e t hat t he “ r eg u lat io n g ap” b et w een incu m b ent and new ent r ant s can b e b r idg ed b y est ab lishing st r at eg ic o per at ing f r am ew o r k s and ex t r act ing m ax im u m v alu e o u t o f shar ed r eso u r ces t hr o u g h self - g o v er nance m echanism s. S o m e su g g est io ns em er g ing f r o m t he shar ing eco no m y indu st r y ar e:

•

A s a w elco m e m o v e, t he cent r al g o v er nm ent has issu ed adv iso r y g u idelines f o r o ndem and t r anspo r t t echno lo g y ag g r eg at o r s and it is t he indu st r y ’ s o pinio n t hat t hese g u idelines sho u ld b e lar g ely f o llo w ed b y t he st at e g o v er nm ent s.

Relaxing ► regulatory controls to drive the growth of t he shar ing eco no m y b u sinesses. F o r inst ance, su ch regulatory flexibility could include low corporate tax rates; better access to credit through financial market reform; w o r k f o r ce m ar k et r ef o r m s t o at t r act t alent ed st af f and flexible contracting laws

A ccepting tech pl atforms to d o red u nd ant task s

•

Relaxing industry-specific regulations

•

Acceptance ► and increased reliance on advanced t echno lo g ies t o per f o r m r edu ndant t ask s inclu ding inv o icing •

For ► example, a smartphone available to taxi drivers o r deliv er y ag ent s m ay also per f o r m t he f u nct io n o f g ener at ing and em ailing an inv o ice t o t he cu st o m er

New approach to legislation •

Use ► emergence of new business models as an opportunity t o dev elo p a new , “ em pt y t he b o x ” appr o ach t o r eg u lat io n, building on the committee’s research, findings, analysis, and r eco m m endat io ns •

This ► approach to regulatory reform keeps intact only those pr o v isio ns t hat ar e necessar y and r elev ant t o day

28


•

S trengthening sel f- gov ernance mechanisms Implementing ► bottom-up governance mechanisms by utilizing information available that only the consumers can pr o v ide. F o r inst ance, t he u b iq u it o u s u se o f r at ing and r epu t at io n sy st em s is no t f o r ced inclu sio ns b y t o p- do w n r eg u lat o r s. These m echanism s ar e t he r esu lt o f m ar k et co m pet it io n aiding t he dev elo pm ent and su pply o f r eliab le pr o du ct s and ser v ices

S har ing eco no m y and it s r o le in k ey init iat iv es o f t he G o v er nm ent o f India ( G o I)


29

T

he benefits of the sharing economy companies are not just lim it ed t o t he co nsu m er , em plo y ees o r t he so ciet y b u t t he sect o r also indir ect ly helps in so m e o f t he G o I init iat iv es.

Digital India program The shar ed eco no m y co m panies dir ect ly help in ex panding t he r each o f t he int er net and sm ar t pho nes in t he so ciet y . S ince sm ar t pho ne u sag e is o ne o f t he m aj o r dr iv er s o f t he o n- dem and eco no m y , ser v ice pr o v ider s and co nsu m er s need t o b e co nnect ed t o t he Int er net t o par t icipat e. The shar ing eco no m y co m panies in t he do m ain o f F & B , t r anspo r t at io n and ho spit alit y su g g est ed t hat t hey hav e pu t sm ar t pho nes in t he hands o f su ch peo ple w ho o t her w ise eit her co u ld no t af f o r d o r w er e no t inclined t o ado pt o ne. The incent iv e o f b et t er inco m e act s as a dr iv er t o pr o pag at e t he dig it al lit er acy dr iv e. These co m panies also t r ain t hem in t he u sag e o f int er net and it s asso ciat ed benefits.

Skill India program The shar ed eco no m y co m panies ar e no t o nly pr o v iding dig it al lit er acy t o it s em plo y ees o r st ak eho lder s in t he indu st r y , b u t ar e also t r aining t hem o n lang u ag e sk ills, soft skills as well as basic mechanic skills for efficiency. A ll o f t hese co nt r ib u t e t o w ar ds u psk illing peo ple, w hich is t he b asic aim o f t he g o v er nm ent ’ s sk ill India pr o g r am . The shar ing eco no m y co m panies ar e pu t t ing a significant focus on training the staff in hotels, delivery per so nnel, dr iv er s et c b ecau se cu st o m er sat isf act io n has b eco m e a k ey su ccess f act o r in t he su ccess o f any o f t hese co m panies. O ne o f t he leading t r anspo r t at io n plat f o r m s in India has plans t o t r ain 5 0 , 0 0 0 w o m en drivers to make them fit for the job and be microent r epr eneu r s t hem selv es.

30


“ S u st ainab le env ir o nm ent is o ne o f t he m aj o r co nt r ib u t io ns t hat a shar ed eco no m y is lending . B y enco u r ag ing peer t o peer r ent ing , r eso u r ces su ch as f o o d, w at er and electricity are utilized economically and t hu s t he co ncept o f a shar ing eco no m y as ag ainst indiv idu al ownership is being popularized. A ddit io nally , du e t o t he o r g anic av ailab ilit y o f m o r e liv ab le spaces, land and f o r est deplet io n cau sed b y t he b u ilding o f new ho t els and shelt er s w ill co nsider ab ly r edu ce. ”

Sachit Singhi, Co-founder, Stayzilla

Positive impact on the environment The v er y co ncept o f t he shar ing eco no m y is b ased o n efficient utilization of existing assets. Creation of new asset s eg . ho t els do es hav e an adv er se ef f ect o n t he env ir o nm ent . L esser car s o n t he r o ad w o u ld hav e a po sit iv e ef f ect o n po llu t io n lev els and also cau ses lesser w ear and t ear o f r o ad inf r ast r u ct u r e.

Smarter cities The shar ing eco no m y co m panies, par t icu lar ly in t he transportation sector, generate significant data on the behavior of traffic in the city at various times of the day. This data can be utilized to route vehicular movements, identification of bottlenecks etc to reduce congestion and ensure better traffic flow.

The o ppo r t u nit y ahead f o r t he shar ing eco no m y in India


31

I

nt er net penet r at io n in India co m par ed w it h t he o t her B R IC and dev elo ped co u nt r ies is st ill nascent . H o w ev er , in t er m s o f act u al nu m b er s, t he av ailab le po o l o f int er net u ser s t hat can b e t ar g et ed is o nly t hir d in t he w o r ld, nex t t o C hina and t he U S . F u r t her , India is po ised t o su r pass t he U S t o b eco m e t he co u nt r y w it h t he seco nd- lar g est int er net u ser b ase in 2 0 1 5 . With internet penetration at just 19.2%, there is significant o ppo r t u nit y f o r t he co m panies in t he shar ing eco no m y t o g r o w .

Ind ia

K ey d ev el oped cou ntries

B R IC cou ntries

Int er net u ser b ase

2 4 3 m

2 8 0 m

5 7 m

6 4 2 m

1 0 8 m

8 4 m

Int er net penet r at io n

1 9 .2 %

8 6 .8 %

8 9 .9 %

4 6 .0 %

5 3 .4 %

5 9 .3 %

O nline sho pper s

3 5 m

1 9 7 m

4 1 m

3 6 1 m

3 3 m

3 0 m

R et ail e- co m m er ce ( $ b illio n)

5 .2

3 0 5 .7

8 2 .0

4 2 6 .3

1 6 .3

1 7 .5

2 0 1 2 -2 0 1 4 C A G R

4 7 .2 %

1 6 .1 %

1 6 .7 %

4 0 .9 %

2 5 .0 %

2 1 .6 %

.

O nline as % o f t o t al r et ail

0 .7 %

6 .5 %

1 3 .0 %

1 0 .1 %

3 .8 %

2 .2 %

$

To t al m - co m m er ce m ar k et ( $ b illio n)

0 .6

8 6 .0

2 2 .0

1 4 0 .0

1 .1

3 .0

S o u r ces - Int er net liv e st at s, IA M A I, eM ar k et er , S t at ist a and Int er net r et ailer

The shar ing eco no m y t r end in India is g aining t r act io n as more consumers, particularly urban millennials, are finding it co nv enient and co st ef f ect iv e. S har ing per so nal pr o du ct s su ch as o ne’ s ho m e o r car t hat ar e cu r r ent ly no t in u se b y t he o w ner is st ill t o b e seen. H o w ev er , t he o ppo r t u nit ies it pr esent s ar e su b st ant ial, g iv en t he dem o g r aphics, m ar k et dem and and shif t in co nsu m er pr ef er ences.

32

M o b ile pr o lif er at io n has b een a k ey dr iv er f o r t he shar ing eco no m y co m panies in all co u nt r ies inclu ding India. The nu m b er o f m o b ile su b scr ib er s is ex pect ed t o g r o w at a m u ch f ast er r at e du e t o decr easing co st s o f sm ar t pho nes and af f o r dab le co nnect iv it y co st s. 4 G r o ll- o u t and incr ease in 3 G penet r at io n w ill b o o st speeds. S ince m o st o f t he shar ing eco no m y co m panies lev er ag e m o b iles as a m ediu m t o r each cu st o m er s, t hese co m panies ar e all set f o r a r apid g r o w t h.


* A ll dat a as o f 2 0 1 4

H o u seho ld g o o ds

A ssets

A cco m m o dat io n Tr anspo r t at io n

S er v ices deliv er y

S erv ices D o m est ic help

H o u seho ld cho r es

Online staffing

E x pertise E du cat io n H ealt hcar e

Till no w , t he shar ing eco no m y has b een m o r e im pact f u l in t he co nsu m er m ar k et s e. g . t r anspo r t at io n and r et ail w her e phy sical asset s ar e co nsu m ed as ser v ices. H o w ev er , as t he b r av e new w o r ld o f co m m er ce u nf o lds, shar ing eco no m y m o dels w ill m ak e r apid inr o ads t o inclu de a w ho le r ang e o f int ang ib le ser v ices su ch as o n- dem and cleaning ser v ices and deliv er y ser v ices. F u r t her m o r e, t he pr o v en su ccess o f t he shar ing eco no m y has hu g e po t ent ial t o b e r eplicat ed acr o ss indu st r ies su ch as healt hcar e and edu cat io n. V ar io u s f act o r s m ak e t hese indu st r ies “ shar ing eco no m y - r eady ” . Int ense competition and inherent inefficiencies in delivering education and car e ar e dr iv ing pr o v ider s’ r elent less f o cu s o n eco no m ies o f scale, and dig it al t echno lo g ies ( clo u d, m o b ilit y , so cial m edia and analy t ics) ar e lay ing st r o ng g r o u ndw o r k f o r m ak ing seam less shar ing po ssib le in t hese indu st r ies. S o m e u se- cases inclu de t r anspo r t at io n ag g r eg at o r o f f er ing it s plat f o r m f o r hear t - disease scr eening s o r adm inist er ing v accines. N u r ses, w ho w o r k f o r ser v ice pr o v ider s inst ead o f o ne par t icu lar ho spit al — t hey ar e t o ld w her e t o r epo r t , b ased o n need. S im ilar ly , apply ing shar ing m o del t o edu cat io n is a m aj o r st ep t o m ak e edu cat io nal r eso u r ces accessib le and r eadily av ailab le. A k no w ledg e m ar k et place can pr o v ide a po w er f u l su pplem ent t o t he t r adit io nal lear ning ex per ience.

The ev o lv ing shar ing eco no m y b u siness models may lead to significant regulatory chang es. A t t he m o m ent , ho w ev er , t he shar ing eco no m y m ar k et is g r o w ing at a q u ick pace w it h new st ar t - u ps em er g ing in ex ist ing and new cat eg o r ies. Techno lo g y has enab led t he co nsu m er t o ex per ience a new w ay in w hich g o o ds and ser v ices ar e consumed. Considering that the benefits of t he shar ing eco no m y m o del ar e v isib le, t he po t ent ial f o r g r o w t h is g r eat . A s clar it y o n t he r eg u lat o r y env ir o nm ent ar o u nd t hese b u siness m o dels em er g es w it h t im e, t he ex ist ing m o dels w ill adapt t o t he chang es and plat f o r m s w ill b eco m e m o r e secu r e b u siness m o dels. This w ill also enab le co nsu m er s t o ex per ience a b et t er and co nsist ent lev el o f ser v ice.


33

N o t es

C ontact u s R anj an B isw as

P ar t ner and N at io nal D ir ect o r – Techno lo g y , M edia and Teleco m R anj an. B isw as@ in. ey . co m

A nk u r P ahw a

M il an S heth

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N C R G o lf V iew N ear D L F S ect o r 4 2 G u r g ao n Tel: + 9 1 F ax : + 9 1

P ar t ner , TA S - Tr ansact io n D ilig ence A nk u r . P ahw a@ in. ey . co m

P ar t ner , A dv iso r y P I and India Techno lo g y L eader M ilan. S het h@ in. ey . co m

Our offices A hmed ab ad 2 nd floor, Shivalik Ishaan N ear C . N . V idhy alay a A m b aw adi A hm edab ad - 3 8 0 0 1 5 Tel: + 9 1 7 9 6 6 0 8 3 8 0 0 F ax : + 9 1 7 9 6 6 0 8 3 9 0 0 B engal u ru 1 2 t h & 1 3 t h floor U B C it y , C anb er r a B lo N o . 2 4 V it t al M ally a R B eng alu r u - 5 6 0 0 0 1 Tel: + 9 1 8 0 4 0 2 7 5 + 9 1 8 0 6 7 2 7 5 F ax : + 9 1 8 0 2 2 1 0 6 F ax : + 9 1 8 0 2 2 2 4 0

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C o r po r at e To w er B G o lf C o u r se 1 2 2 0 0 2 1 2 4 4 6 4 4 0 0 0 1 2 4 4 6 4 4 0 5 0

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4 th& 5 thF S ect o r 1 2 N O ID A 2 0 G au t am B Tel: + 9 1 F ax : + 9 1

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F o llo w u s @ E Y _ India J o in t he b u siness net w o r k f r o m

E Y

F o r m o r e inf o r m at io n, v isit w w w . ey . co m / in

E r nst & Y o u ng L L P EY | A ssu r ance | Tax | Tr ansact io ns | A dv iso r y About EY E Y is a g lo b al leader in assu r ance, t ax , t r ansact io n and adv iso r y ser v ices. The insig ht s and q u alit y ser v ices w e deliv er help b u ild t r u st and co nf idence in t he capit al m ar k et s and in eco no m ies t he w o r ld o v er . W e dev elo p o u t st anding leader s w ho t eam t o deliv er o n o u r pr o m ises t o all o f o u r st ak eho lder s. In so do ing , w e play a cr it ical r o le in b u ilding a b et t er w o r k ing w o r ld f o r o u r peo ple, f o r o u r client s and f o r o u r co m m u nit ies. EY refers to the global organization, and may refer to o ne o r m o r e, o f t he m em b er f ir m s o f E r nst & Y o u ng G lo b al L im it ed, each o f w hich is a separ at e leg al ent it y . E r nst & Y o u ng G lo b al L im it ed, a U K co m pany lim it ed b y g u ar ant ee, do es no t pr o v ide ser v ices t o clients. For more information about our organization, please v isit ey . co m . E r nst & Y o u ng L L P is o ne o f t he Indian client ser v ing m em b er f ir m s o f EYGM Limited. For more information about our organization, please visit w w w . ey . co m / in. E r nst & Y o u ng L L P is a L im it ed L iab ilit y P ar t ner ship, r eg ist er ed u nder t he L im it ed L iab ilit y P ar t ner ship A ct , 2 0 0 8 in India, hav ing it s r eg ist er ed o f f ice at 2 2 C am ac S t r eet , 3 r d F lo o r , B lo ck C , K o lk at a - 7 0 0 0 1 6 ©

2 0 1 5 E r nst & Y o u ng L L P . P u b lished in India. A ll R ig ht s R eser v ed. E Y IN 1 5 1 0 - 1 1 4 E D N o ne This pu b licat io n co nt ains inf o r m at io n in su m m ar y f o r m and is t her ef o r e int ended f o r g ener al g u idance o nly . It is no t int ended t o b e a su b st it u t e f o r det ailed r esear ch o r t he ex er cise o f pr o f essio nal j u dg m ent . N eit her E r nst & Y o u ng L L P no r any o t her m em b er o f t he g lo b al E r nst & Y o u ng organization can accept any responsibility for loss occasioned to any per so n act ing o r r ef r aining f r o m act io n as a r esu lt o f any m at er ial in t his pu b licat io n. O n any specif ic m at t er , r ef er ence sho u ld b e m ade t o t he appr o pr iat e adv iso r . B C

EY refers to the global organization, and/or one or more of the independent m em b er f ir m s o f E r nst & Y o u ng G lo b al L im it ed

The rise of the sharing economy - Ernst & Young

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