Uber, Ola hit a speed bump as Indian government caps surge pricing and issues new guidelines

• The Union Road Transport Ministry has issued new guidelines for motor vehicle aggregators.
• The driver should receive 80% of the fare applicable on each ride, while 20% will go to the aggregator, while surge pricing has been capped at 1.5 times the base fare.
• This will come as a blow for the cab aggregators Uber and Ola, who have been on a slow path to recovery after the coronavirus pandemic.

Indian ride-hailing aggregator businesses have hit a speed bump with the Indian government’s fresh motor vehicle aggregator guidelines.

According to the Union Road Transport Ministry has issued new guidelines for motor vehicle aggregators:

• The driver should receive 80% of the fare applicable on each ride, while 20% will go to the aggregator.
• The aggregator will be allowed to charge only 50% lower than the base fare.
• Surge pricing has been capped at 1.5 times the base fare.
• The base fare will be for a minimum of 3 kilometres.
• The aggregators will have to ensure data localisation and ensure the data is stored in an Indian server for a minimum of three months and a maximum of four months from the date on which the data was generated.
• The data will also have to be made accessible to the Indian government as per law but customers data will not be shared without the consent of the user.
• The cab aggregators will also have to establish a 24X7 control room and all drivers will have to mandatorily be connected to the control room at all times.
• Additionally, the state government may by way of a notification direct 2% over and above the fare towards the state exchequer.

The cap on surge fees and 80% of fare reserved for drivers will come as a blow for the cab aggregators, who have been on a slow path to recovery since the coronavirus pandemic. Both Uber and Ola, which hold the largest market share, saw their business come to a complete halt during the lockdown months of April and May because of the COVID-19 pandemic. In 2019, Uber had claimed to have facilitated 14 million rides a week, while Ola had reportedly seen 28 million rides a week.

Business Insider has reached out to both Ola and Uber for their comments.

The new guidelines come at a time when cab drivers and auto-rickshaw drivers in Karnataka have been on strike demanding help from the state government on multiple issues, including interest-free loans up to ₹1 lakh for auto drivers and ₹2 lakh for cab drivers. The drivers, who were also demanding free housing from the state government, also sought implementation of a minimum fixed price and taxi metres, and cutting down on excessive commission charged by cab aggregators.

Meanwhile, the government has also opened up an avenue for the aggregators by allowing non-transport vehicle pooling. “A maximum of four ride-sharing intra-city trips on a calendar day and a maximum of 2 ride-sharing inter-city trips per week shall be permitted for each vehicle with the driver, integrated with the aggregator,” the guidelines say, reported ET.


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