With exit from food delivery, Uber will double in its competition with rival Ola for the ride-hailing business.
After several months of speculations, Zomato announced on Tuesday morning that it had acquired Uber Eats India.
However, the deal does not come without perks for the existing customers of Uber Eats.
All delivery drivers for the service, known as Uber Eats, and basic information about customers, including their phone numbers and order history, will be transferred to Zomato, the companies said. The company went public last May, and has since then been working towards turning profitable.
The move by Uber is believed to rally the company forward towards dropping verticals that are loss making.
Uber Eats India will now discontinue operations and restaurants, delivery partners, and users of the Uber Eats apps will be directed to the Zomato platform, effective Tuesday. Uber's CFO Nelson Chai on analyst calls earlier has said that India is a market where it has a low or negative take rate (commissions it earns on deliveries).
Uber, on the other hand, that saw a lacklustre IPO in May this year, had been struggling to sustain its food delivery business in India.
Naspers-backed Swiggy and Zomato, backed by Jack Ma's Ant Financial, now lead India's food-delivery sector, which like elsewhere is showing signs of consolidation.
Over the past six months, both companies have cut discounts. Also, UberEats, which operates in 41 cities, will now redirect its customers to Zomato.
"Through this deal, Uber Eats India users now become Zomato users", a statement by Zomato said.
"When any tech industry reaches maturity, there have been examples that it turns into a duopoly", said Gogia.
The deal marks yet another leg in a wave of consolidation sweeping the food delivery sector. Commenting on the development, Dara Khosrowshahi, CEO of Uber, said India remained an exceptionally important market to Uber and the company would continue to invest in growing local rides business.