Uber, Ola surge price capped; 10-hour break must for taxi drivers

Uber, Ola surge price capped; 10-hour break must for taxi drivers

Ride-hailing aggregators such as and have been brought under the Centre’s regulation, implying greater scrutiny and stringent penalties for any non-compliance related to passenger fare and labour rules like working hours of drivers. Government control over the cab tariff structure tops the list of regulations. The new norms, as per the Motor Vehicle Aggregator Guidelines 2020, have mandated a cap on surge price, preventing aggregators from charging more than 1.5 times of the base fare.

The new legal framework would also mean a driver working with Ola, or similar aggregator cannot be logged in for more than 12 hours in a day. There has to be a mandatory 10-hour break after working for 12 hours. For cancellation of bookings, either by the driver or the rider, the penalty has been fixed at 10 per cent of the fare, but it cannot exceed Rs 100.

The cab aggregator stares at suspension of licence on multiple grounds —if it fails to ensure safety of its riders, if it charges higher rates repeatedly and in case it fails to comply with the contractual obligations towards drivers. If the aggregator receives more than three suspensions in a financial year, its licence will be cancelled and the aggregator will be forced to stop operations with immediate effect.

Aggregators may provide pooling facilities to only those riders whose KYC (know your customer) details are available and who will travel along the same route but with varied stoppages under a virtual contract through the app.

Key guidelines

  • If driver cancels the ride after accepting it on the app, a penalty of 10% of the total fare, not exceeding ~100, shall be imposed

  • If rider cancels the ride, a similar penalty shall be levied

  • Cab aggregator’s licence may be suspended if it fails to ensure safety of its riders or if riders are charged higher

  • If the aggregator receives more than three suspensions within one financial year, its licence shall be cancelled

  • Aggregators may provide pooling facilities to riders whose KYC details are available

  • The driver shall receive at least 80% of the fare applicable on each ride, and the rest shall go to the aggregator

Female passengers seeking to avail ride pooling will be provided the option to pool only with other female passengers.

The guidelines will have a mixed impact, according to Ujjwal Chaudhry, associate partner consumer internet at consulting firm RedSeer. It is positive in terms of formalising the sector as well as increasing the consumer trust on aggregators through improved safety regulations, but there may be a negative impact on the ecosystem, he said. Capping surge and platform fee will ultimately lead to reduced earnings for 500,000 drivers (currently on these platforms) and will also lead to increased prices and higher wait time for consumers, according to Chaudhry.

Ride-hailing firms and declined to comment on the new government guidelines.

The Ministry of Road Transport and Highways issued the Motor Vehicle Aggregator Guidelines 2020 as per the requirements and provisions of the Motor Vehicles (Amendment) Act, 2019, and further as per the amended Section 93 of the Motor Vehicles Act, 1988, on Friday to enable the changes.

An official statement by the road ministry said, “The Motor Vehicles Act, 1988 has been amended by the Motor Vehicles Amendment Act, 2019 to include the definition of the term ‘aggregator’. Prior to the amendment, the regulation of aggregator was not available.”

The business shall also be considered as a service provided by the aggregators to serve the larger public interest in terms of generation of employment and cost-effective as well as comfortable commutation facilities to the public.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor