BackTransport authorities struggle to enforce ban on taxi services firms
Web-based taxi firms neither have a fleet of their own nor do they employ drivers, leaving authorities in a spot
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Hyderabad/Bengaluru/Mumbai: State governments enforcing a ban on online taxi booking companies are facing challenges implementing it as they grapple with new business models in the Internet economy.
Karnataka and Andhra Pradesh on Thursday joined Delhi and Telangana in banning unregistered cab operators. An alleged rape inside an Uber cab in Delhi sparked outrage across the country, prompting the Union government to issue an advisory to states and union territories to stop unregistered web-based taxi service firms from plying their business.
Internet-based cab services typically act as intermediaries between consumers and taxi drivers, and earn money by taking a cut on each successful transaction. They identify themselves as technology companies providing a service rather than as taxi operators. Unlike traditional cab operators, Internet-based taxi companies neither have a fleet of their own nor do they employ drivers directly, making it difficult for authorities to impose a ban by seizing vehicles or preventing them from going on the road.
Authorities reckon that they have little power to enforce the ban apart from conducting random checks of taxis plying on the roads.
Road transport authorities in Hyderabad, for example, have booked 116 cabs for various violations of the Motor Vehicles Act, and seized 60 of them during surprise checks on Wednesday and Thursday. None of them was an Uber cab. Transport regulators in Bengaluru booked nearly 250 cabs for various violations within hours of the ban, Times of India reported on Friday. But the violations relate to the absence of city taxi permits, driving licences, or digital meters, which is not confined to the banned taxi operators alone.
“We found certain private vehicles being used as cabs without permission," said B. Venkateswarlu, joint transport commissioner of Hyderabad. “None of the Internet taxi companies have got permission. We are verifying all such cases."
Authorities are also relying on the public to comply with the ban. “After a government notification, people will be hesitant to use the service," Venkateswarlu said. Drivers, he said, are also expected to comply.
But people have continued to use the services of Uber, Ola and TaxiForSure in different cities on Friday. Uber remained unavailable in Delhi after the San Francisco-based company said on Thursday that it was suspending operations in the national capital.
Some state governments are yet to make up their mind on banning unregistered Internet-based taxis.
“No decision has been taken yet on banning internet-based taxis in Maharashtra. We will take action as and when the government instructs to do so," Maharashtra’s transport secretary S. K. Sharma said on Thursday.
The reason behind Maharashtra’s decision to go slow on web-based cab operators wasn’t immediately clear. Sharma refused to share more information, citing the ongoing winter session of the state assembly.
Authorities are also trying to figure out whether the Internet-based taxi companies that identify themselves as technology providers come under the Motor Vehicles Act or the Information Technology Act.
“Boundaries are blurring across multiple dimensions," said Sangeeta Gupta, senior vice-president of industry lobby Nasscom. “Clearly, what worked in the old economy won’t work in the digital economy."
As the internet economy booms, more “aggregators of different kinds of services would emerge," said D.K. Srivastava, chief policy advisor at consulting firm EY. “Instead of trying to cover them under some proxy law, it would be best to bring out a new law for these kinds of aggregators."
Gupta said that is a possible solution in the long term.
In the immediate future, however, a modification of existing policies is essential to enable the industry to grow. The fast growth of the Internet economy makes it difficult to predict challenges, Gupta said.
“The challenges of today will be very different two years from now," she said. “In the long term, the digital economy we are moving towards needs a new set of laws."
Cab booking companies are technology platforms or market places that tap into already legal entities such as commercial drivers, reasoned an investor in Savaari, an online car rental company. “So legally we think they are in the clear. After the rape incident, clearly the companies recognize that there’s an urgent need to improve safety but a ban is no solution," this investor said on condition of anonymity.
This knee-jerk reaction of the government, this person said, has led to a lot of concern among investors in cab booking companies as well as the general start-up investor community.
To prevent a recurrence of the Delhi incident, the Telangana transport department is planning to establish a centralized monitoring room for all hired transport—taxis, auto rickshaws and school buses—in collaboration with the police department.
“We are working on it," Venkateswarlu said.
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