Rickshaws are an example of the promise and pitfalls of transport in India.

Rickshaws pass through a busy junction. December 26, 2012. Marcin Wichary/Flickr CC BY 2.0

By Albab Seifu | November 1, 2016

Auto-rickshaws in everyday life

Known in Ethiopia as bajaj, in Kenya as tuk-tuk, and in Nigeria as keke-marwa, auto-rickshaws are increasingly popular modes of transport across emerging African and Asian economies. In India, the production and sale of auto-rickshaws doubled between 2003 to 2006, with this type of intermediate public transport now accounting for 10-20% of daily trips. While there are three types of rickshaws – hand pulled, cycle pulled, and engine driven – only the latter provides labour-reducing employment opportunities for the poor, and only it represents a growing source of revenue for multinationals.

The chaotic city centres of Mumbai and Nairobi highlight how these motorised three-wheelers manage to swiftly navigate short distances, heavy traffic, and crowded streets. Auto-rickshaws, however, are not limited to city centres; they are also used as last-mile connectivity solutions in suburban areas and as private door-to-door service providers.

In large cities such as Lagos or Bangkok, the pervasive intra-urban use of auto-rickshaws is partially due to infrequent, slow, and costly traditional public transport options. But, in small and medium-sized cities, auto-rickshaws provide a cost-effective and convenient service.

They also provide self-employment opportunities with relatively low barriers to entry in economies with limited jobs for the low skilled. Motorised three-wheelers are not only affordable and accessible modes of transport but they also create a pathway to economy-wide job creation.

Indian automotive industry’s global reach

In India, the production of passenger cars and commercial vehicles began as early as the 1900s. However, today, passenger cars account for only 16% of the country’s automobile market; prices remain prohibitively high. Two- and three-wheelers, first introduced in the 1920s, accounted for 80% of India’s automobile market in 2010, with the latter alone now representing a $10bn industry.

Benefits of Auto-Rickshaws
Benefits of Auto-Rickshaws

The Delma Institute, 2016

Unsurprisingly, India’s automotive industry is a major contributor to socio-economic development, as it employs 19m workers and accounts for 7% of the country’s GDP. Additionally, Indian automotive companies are regarded as leaders in forging international and domestic alliances to attract new capital and nurture innovation. Multinationals operating in the sector, such as Bajaj Auto, have in recent decades tapped into the worldwide demand for affordable, motorised vehicles by investing heavily in the diversification of their two- and three-wheeler ranges.
Bajaj Auto, the largest manufacturer of three-wheelers in the world, plays a significant role in introducing new technology and features to the auto-rickshaw industry.

The auto giant partners with academic and research institutions to improve product engineering and marketing activities, in addition to ensuring sustained innovation capacity. The company’s growth and diversification from basic two-wheel scooters, to higher-capacity motorcycles, to compact three-wheelers reflects adjustments in evolving consumer desires and incomes.

India’s Automotive Industry
India’s Automotive Industry

Sources: KPMG India, 2010; CKPIM Business Review, 2015

Product diversification was closely followed by geographic diversification, with nearly half of Bajaj’s production going to export markets in 2015, with 30% of all exports destined for Nigeria. India’s auto- rickshaw industry serves as an example of how a dynamic light manufacturing sector can build domestic capacity to innovate, contribute to economic growth both in terms of jobs and GDP, and provide solutions to the transport challenges of the 21st century.

Lessons from India’s experience

Emerging economies recognise the need for efficient, clean, and affordable transport options in urban and semi-urban areas, drafting policies in line with these goals. Nevertheless, the implementation of sustainable and well-integrated solutions is lagging, and there is limited appreciation of the vital role the auto-rickshaw industry plays in filling a growing service gap. Auto-rickshaws are “feeder service for public transport” and offer alternatives to private motor vehicles; they could also form part of sustainable transport and employment solutions if due consideration is granted to them.

However, restrictions in Mumbai and Delhi on the number of auto-rickshaw permits add to insecurity in a largely unorganised and informal sector, leading to an increase in prices and a rise in social tensions. Disregard for the sector is further reflected in the lack of internationally recognised and enforceable regulatory frameworks that guarantee safety and security, fair pricing, and environmental and social protection for auto-rickshaw drivers and passengers alike.

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