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Surge prices cannot be 50% more than the base fare, and the aggregator cannot reduce prices 50% below the base fare (Mint)
Surge prices cannot be 50% more than the base fare, and the aggregator cannot reduce prices 50% below the base fare (Mint)

Surge fares capped for ride-hailing cos

According to the guidelines, an aggregator will be allowed to charge a fare 50% lower than the base fare and a maximum surge pricing of 1.5 times the base fare

NEW DELHI : App cab operators, including Uber and Ola, must adhere to new fare caps and price floors, levy cancellation charges and ensure driver welfare, under new rules for cab aggregators issued on Friday.

Surge prices cannot be 50% more than the base fare, and the aggregator cannot reduce prices 50% below the base fare, the Union road ministry said. This limits their room to raise fares at peak hours.

Drivers will receive at least 80% of the fare, while the aggregator can keep the rest, under the new rules. In states where the government has not set taxi fares, the base fare will be 25-30. A driver who cancels a ride without a valid reason set by the aggregator must pay a penalty of 10% of the fare, not exceeding 100. A similar charge will be levied if the rider cancels the trip, which will be split between the driver and the aggregator.

Queries sent to Ola and Uber remained unanswered till press time.

Parliament amended the Motor Vehicles Act in 2019 to carve out ‘aggregators’, a new category of digital intermediaries or marketplaces, which passengers can use to connect with a driver. The rules will apply to all vehicles, including bikes, cars, auto-rickshaws, buses and e-rickshaws.

Before the 2019 amendment, there were no uniform guidelines for aggregators and the rules differed from state to state, leading to occasional regulatory hurdles.

“These guidelines will provide a guiding framework to states/UTs to consider for issuance of licences as well as regulating the business being conducted by such aggregators," the ministry wrote to chief secretaries of all states.

Aggregators must ensure health and term insurance for each driver for at least 5 lakh and 10 lakh, respectively, with the base year of 2020-21 and increased by 5% every year. They must ensure that a driver is not logged in for 12 hours on a given day. However, there has to be a mandatory 10-hour break in case the driver logs in for more than 12 hours on a given day.

States can suspend the aggregator’s licence if there is ‘systemic failure’ to ensure the safety of the rider and driver, repeated financial inconsistencies on fares, the unjustified imposition of surge pricing and ‘severity of financial swindling’, among others. Data generated by the app must be stored on a domestic server for a minimum of three months and maximum of 24 months.

Aggregators must also set up a 24x7 control room to monitor the movement of all vehicles. The app must display a call centre phone number and email address at all times.

States can regulate eligibility conditions, compliances on vehicles, drivers, apps and websites, fares, drivers’ welfare and evolving concepts like car pooling and ride-sharing.

“While the guidelines are positive in terms of formalizing the sector as well as increasing the consumer trust through improved safety regulations, the overall impact of these guidelines on the ecosystem growth is negative, as 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 times for the 60-80 million consumers who use it for their mobility and commute needs," said Ujjwal Chaudhry, associate partner (consumer internet) at Redseer on Friday.

Sharan Poovanna contributed to this story.

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