Rs 5 Lakh Insurance For Every Ola/Uber Rider; 10% Cap On Income/Ride: Govt’s Regulation Plan For Taxi Apps

In the coming days, the business of on-demand taxis in India is going to be transformed, by a huge margin.

Govt has proposed some big-time changes to the existing business model of Ola and Uber and other taxi apps, and going by the looks of it, these companies will protest.

But, there is positive news as we: Govt. has identified that online taxi apps help to reduce congestion and pollution, and they are here to stay. 

But, the bad news is that, Govt. will regulate this business.

Uber/Ola Can Be Forced To Cap Profits; Surge Pricing

As per reports coming in, Govt. has decided to modify the Motor Vehicle Act, 2019, and introduce some large scale regulation for taxi-hailing apps.

To start with, Govt. can propose a cap or limit of 10% income, for Uber and Ola, for every ride. Hence, if the proposals are accepted, then these companies cannot make more than 10% profit from any ride.

Right now, the commission which Uber and Ola charges is 20% on an average.

If the proposal is indeed accepted, then the income of these ride-sharing apps will reduce by 50%.

Limit On Surge Pricing

Govt. has also proposed a limit on surge pricing as well.

Ola and Uber cannot charge more than double of the base fare, as surge price, as per the proposals. Besides, any driver can have maximum of 5 rides, under surge pricing. 

State Govt. can, infact, propose their own surge pricing guidelines, as per the proposal.

The proposals will be soon shared with the public for their suggestions.

An official said, “We are planning to release the draft (aggregator rules) for public feedback sometime next week. It will largely be in line with the guidelines that were shared, with a few small changes.”

Rs 5 Lakh Insurance For All Riders

The proposal mentions that every rider who takes a ride with Ola or Uber, must have compulsory insurance of Rs 5 lakh.

This insurance should be provided by the taxi-app company.

In case a driver cancels a ride, then a 10-15% penalty of the fare, on the driver has been proposed, which should not exceed Rs 100, per instance.

Facial recognition-based identity-check of the driver can also be implemented, which has to be done after every few hours.

As per a Govt. official, it is clear that such ride-hailing services is good for the country. He said, “Ride-hailing is one of the best solutions for India. One cab replaces 10 personal cars on the road and 35% of personal car trips at any given point remain idle. This is what causes congestion.”

We will keep you updated, as more details come in.

Source