Three Wheeler Auto Rickshaws: A Model of Integration to In-City Transportation

By Siddharth Subudhi & Rudraksha Mitra

Three-wheeler auto rickshaw drivers remain in a perpetual state of economic hardship because of significant idle hours with no revenue generation. Having been restricted to passenger carrying, they have no other way but to operate at a low level of economic activity and income while spending at least 6 out of 12 hours as idle time. Autorickshaw, which is their only income-generating asset, is grossly underutilized.

With the introduction of Ola and Uber, the income per day dropped by 43% from Rs 1013 in 2015 to Rs 579 in 2017 due to rides per day reducing from 14 to 6. Monthly earnings range from Rs 4,000 to Rs 15,000 factoring fuel and maintenance (not factoring rent for vehicle).

There is a gap in the market that these autos can exploit. Transportation of goods between 50 to 200 kgs does not have a formal vehicle option. This gap is currently served inefficiently in two ways. One is by higher capacity vehicles such as 3w or 4w goods carriers which results in higher cost for customers and more pollution.

Another is by unauthorized use of passenger rickshaws which results in safety hazards, risk of goods damage, and higher regulation enforcement burden. Passenger autorickshaws have the potential to save logistics costs up to Rs 8,000 crore annually in the top 50 cities and Rs 16,000 crore pan India.

This can be enabled by moving from an informal goods transportation model to a passenger and goods platform model. This is made possible by complimentary peaks of passenger and goods movements and can enhance driver earnings by 15%. The key success factor here is interoperability and network effect with more participation. The challenge is a regulatory obstacle in terms of obtaining a dual license.

Concerns and mitigations are explored in research studies by Prof. Anoop Chawla, Volvo Chair IIT Delhi (Amplifying income potential of three wheeler auto-rickshaw drivers, a report prepared by C-DEP and Professor Anoop Chawla, IIT, Delhi)  and World Resources Institute (WRI) (Assisting the Viability of Using Autorickshaws for Urban Freight Delivery in India, Working Paper, WRI, India).

These studies suggest that safety can be addressed by the use of harnesses and norms around weight (<225 kg), volume (goods not coming out of confines) center of gravity, and nature of goods (heavy goods such as construction materials should be prohibited).

Overloading concerns around the impact on road infrastructure may not be significant due to the smaller vehicle category. Other overloading concerns can be addressed through increased awareness, explicit consent not to overload, and easy identification of visual indicators.

Benefits of dual usage include enhancing the income of the driver by Rs 1,100 to Rs 1,200 per day, ease of logistics movement, increased tax collection due to licenses and increased volume of local internal trade, lower cost of doing business for SMEs, enhanced asset utilization by ~30% to 60%, strengthened last mile delivery and employment generation. Additionally, a dual license can significantly reduce local-level corruption on account of bribe collection from passenger auto-rickshaws being used illegally for goods transportation.

Enablers for dual licenses could be through the Motor Vehicles Act, of 1988. Under Section 2B, the Central Government has the power to exempt specified categories of vehicles from the applicability of the law to promote innovation, research, and development in the fields of vehicular engineering, mechanically propelled vehicles, and transportation in general.

Under Section 67(3), State Governments have the power to develop a scheme, or issue licenses to promote development and efficiency in transportation, improve urban transport, and better use of transportation assets.

A provision for a dual license for auto-rickshaw drivers is much needed. Auto’s today are no longer the mainstay for long-distance travel by passengers as they have been sidelined by Ola and Uber. They are now primarily preferred for short distances (<5 km), or last-mile travel.

With the introduction of ONDC platforms, a dual license will make interoperability a viable livelihood option for auto-rickshaw drivers in India.

Three-wheeler auto-rickshaws are a national asset and, if not utilized to its fullest potential, would result in a national loss. To ensure optimum utilization of national assets, the government may consider adopting dual licensing of three-wheeler auto-rickshaws by allowing them to carry goods of 50-200 kg. A similar relaxation for two-wheelers has changed the last mile delivery and enabled many business models like e-commerce, bike taxi, and food delivery.

In this manner, the dual licensed auto-rickshaws will stand integrated fully into the in-city transportation system.