© Reuters. FILE PHOTO: An employee speaks more than his telephone as he sits at the front desk inside the workplace of Ola cab service in Gurugram

By Chandini Monnappa and Chris Thomas

BENGALURU (Reuters) – The southern Indian state of Karnataka kept the door open on Saturday to talks with neighborhood ride-hailing service Ola to stay clear of a ban that could support rival Uber create industry share.

Karnataka earlier this week issued a notice to suspend Ola’s license for six months for violating government guidelines by operating motorcycle taxis which are not permitted for security factors.

State capital and technologies hub Bengaluru is amongst Ola’s prime 3 markets in India.

V. P. Ikkeri, state commissioner for transport and road security, told reporters the division had seized and issued fines for about 258 bikes through a probe just after complaints.

Ola’s permit, obtained in 2017 and valid to 2021, enables it to run 3 and 4-wheeler taxis in Karnataka. The enterprise, backed by SoftBank Group Corp and Tencent Holdings Ltd, has till Monday to respond to the suspension notice.

“It really is a short-term suspension and if they give us a satisfactory response, then we will not want to implement the ban,” Ikkeri mentioned, adding that Ola would face economic penalties.

Ola did not straight away respond to a request for comment.

It could shed out badly to Uber if pushed out of the industry for an extended period.

“If Uber comes up with a technique to lock in some of the drivers or consumers with extra incentives, it will be tough for Ola to make a comeback,” mentioned Neil Shah, companion and investigation director at Counterpoint Study.

“Assuming the prime 3 (Indian) markets contribute to roughly 35-40 % of Ola’s revenues, if the ban is upheld, we could be hunting at a five-10 % income hit to the enterprise.”

On Friday, the enterprise mentioned it was evaluating all solutions to locate an “amicable remedy” and was operating closely with the authorities.

Ikkeri also mentioned the division had sent a notice about penalties to the final recognized address of Rapido, yet another motorcycle taxi operator in Bengaluru. Rapido could not be reached for comment in spite of several attempts by Reuters.

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