Since a battered Uber sold its business to rival Didi Chuxing in China last week , the ride-hailing sector in India has been abuzz with anticipation of a similar deal in Asia’s other giant market, where ride-hailing companies are reeling from an unending price war.

Industry sources say the fierce price war between the two top players – Ola Cabs and Uber India – has been bleeding the sector in India just as badly as the Didi-Uber rivalry in China, where Uber is estimated to have lost a billion dollars a year.

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Last year, Uber said it would invest US$1 billion in India, mainly to battle Bangalore-based Ola, which was founded in 2011 and is valued at US$4.2 billion.

Industry trackers show Ola is the leading player in India with an estimated market share of 40 per cent, while Uber and Meru follow next with about 30 per cent and 15 per cent. Most of the rest largely play on the fringes, operating only in smaller cities.

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“The predatory pricing followed by two players who dominate the sector has not been helping anyone,” said Siddhartha Pahwa, chief executive of Meru Cabs, a radio cab operator. “It’s only been burning their cash. I think consolidation is also brewing in India because the burn rate is so high.

“Ola and Uber have already spent billions and I am sure they are facing similar pressures [of profitability, like Uber and Didi]. Hence, there is a high probability of an Uber-Didi-like arrangement happening in India leading to the emergence of a monopoly player.”

Arun Kharat, founder of Wings Bookmycab, another traditional radio cab operator, says the price war has reached an unsustainable level and the sector is at the cusp of change. “Bleeding has become the norm and no one is making money,” he says.

For the financial year up to March 15, Ola registered a year-on-year increase in revenue of US$55 million while its losses hit US$110 million.

Uber China on Monday said it was being bought by Didi Chuxing in a deal that would create a new company valued at US$35 billion. San Francisco-based Uber will own 5.9 per cent of the combined company. Baidu and other Didi shareholders such as Alibaba Group, Tencent and Apple will take a 2.3 per cent stake in the new company. Alibaba is the owner of the S outh China Morning Post.

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With Didi’s US$1 billion investment in its rival, Uber will receive close to a 20 per cent stake in Didi while Uber chief executive Travis Kalanick and Didi Chuxing chairman Cheng Wei will sit on each other’s boards.

The implications of the deal in China spill far beyond its borders. Four ride-hailing companies, namely Didi, Ola, Grab in Southeast Asia, and Lyft in the US last year formed a coalition dubbed the “Anti-Uber Alliance” to create business synergy and share know-how and logistics. Didi has also made strategic investments in its three allies – US$100 million in Lyft, US$350 million in Grab and US$30 million in Ola.

Soon after the Uber-Didi deal, an exultant Grab chief executive Anthony Tan told his staff that it was further proof that localised solutions like Grab solve local problems better than global majors like Uber. “Didi’s success reinforces what we have believed all along. That we live in a very diverse world and there is no one-size-fits-all answer,” he wrote in a memo.

Riding on that confidence, Grab, which operates in 30 Southeast Asian cities, is reportedly planning to raise about US$1 billion in fresh capital from Didi, Japan’s SoftBank Group and other investors, to gather more ammo in its battle with Uber.

On the other hand, the deal in China frees up resources for Uber to deploy elsewhere. Some 150 engineers based in San Francisco who have been working on China are understood to have been asked to begin working for other markets, such as Southeast Asia.

So while there are signs of the race between Uber and regional rivals gaining steam, Uber’s jumping into bed with Didi also puts a question mark over the so-called “Anti-Uber Alliance” and it will be a while before the picture clears on who stands where in this emerging global reconfiguration of the industry.

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But industry watchers in India have no doubt that with all the blood that has been spilled, there’s only one way to go: truce. Licensed radio cab operators allege that ride-hailing aggregators such as Ola and Uber, backed by global venture capital, have been recklessly throwing money, driving ride rates to ridiculously low levels. According to industry sources, Ola’s monthly cash burn has reached around US$40 million while Uber’s is around US$30 million.

“Uber ceded to Didi because Didi had a monopoly and Uber felt that burning cash there does not make sense. So it exited China to focus on other markets like India where it could grab a larger market share. My hunch is, Uber may have already lined up a merger with Ola but isn’t announcing it just yet,” Pahwa says.

According to industry estimates, India’s taxi business, with current revenue of about US$3 billion, is growing at over 20 per cent a year, but the organised sector accounts for less than a billion. The total market is expected to grow to US$9 billion by 2020.

“We believe this growth rate will continue for the next 10 years at least, because the level of car ownership – at about 6 per cent compared with 25 per cent globally – is minuscule in India,” says Pahwa. “So a consolidation in the sector would help the market.”