In a significant update aimed at standardising ride-hailing services across the country, the Ministry of Road Transport and Highways has issued the Motor Vehicle Aggregator Guidelines (MVAG) 2025, introducing dynamic pricing, penalty clauses, and mandatory insurance for passengers. The new rules are to be implemented by all states within three months of issuance.
Dynamic Fare Regulation: Peak and Non-Peak Hour Pricing
Under the updated guidelines, aggregators such as Ola, Uber, and Rapido are now allowed to charge a maximum of twice the base fare during peak hours, a change from the earlier cap of 1.5x. Conversely, during non-peak hours, fares may drop up to 50% below the base fare, providing relief for off-hour commuters.
The base fare must be calculated for a minimum of 3 km, covering the “dead mileage” — the distance and fuel cost incurred to pick up the passenger.
Cancellation Penalty for Both Riders and Drivers
In a move to discourage arbitrary cancellations, the Centre has allowed platforms to levy a 10% penalty on fare (up to ₹100) if either the driver or the passenger cancels a ride without valid reason. This seeks to improve reliability and reduce customer frustration on both ends.
Clear Guidelines on Distance-Based Charges
Passengers will now only be charged for the distance between pickup and drop-off points, not for the time or distance a driver takes to reach the passenger — except when the total trip distance is less than 3 km. This ensures fair billing and protects users from hidden charges.
Passenger Safety and Insurance Mandate
Another notable inclusion is a mandatory ₹5 lakh insurance coverage for passengers, ensuring basic financial protection in case of an accident. This reflects the government’s broader push for improved safety standards and accountability in the ride-hailing ecosystem.
State-Level Adoption Within Three Months
The ministry has directed all states and union territories to adopt the new MVAG 2025 norms within three months. States may also introduce additional regulations tailored to local conditions, further standardising aggregator services across India.
The MVAG 2025 guidelines mark a key step in balancing consumer interests, pricing flexibility, and driver accountability—while pushing India’s ride-hailing sector towards safer, fairer, and more transparent practices.
