Indian Government Issues New Regulation Guidelines for Cab Aggregators like Ola and Uber

The Union road transport ministry on Thursday issued the Motor Vehicle Aggregator Guidelines 2020 to establish a regulatory framework for companies like Uber and Ola. The guidelines mandate that surge price by aggregators shall not be more than 1.5 times the base city taxi fare fixed by respective state governments. Also, they cannot offer a discount that is 50% more than the base fare.

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Hence from now onwards, aggregators like Ola and Uber won’t be able to raise funds arbitrarily when the demand is high. Also, the guidelines have made it mandatory that no aggregator will be able to do a business unless granted license by the state government with a fixed fees of Rs 5 lakh. In case of Violation of licensing norms, a penalty of up to Rs 1 lakh and cancellation of the license in case would be charged.

The drivers can be made to pay 10% of fare or a maximum amount of Rs100, if they cancel a ride without a valid reason and similar protocol would be followed in case of the passengers.

This has been done to meet the “objective of reduction in traffic congestion and automobile pollution, and effective asset utilizations”, the ministry said in the 23-page document.

The guidelines also highlight framework for regulating app-based cab booking services which respective states would have to follow, including protocols for safety of commuters and female employees.

The new rules have been introduced at a time when ride-sharing companies are witnessing a drop in revenues as travelers have started to prefer personal vehicles to ensure social distancing during the outbreak of COVID-19. Remote working rules issued by various companies have also impacted the demand.