Govt likely to cap Ola, Uber's surge prices max to 3X

Union government is in the midst of framing new guidelines for cab aggregator platforms addressing several issues, including the dynamic pricing of cab fares during peak hours.

The government will likely allow surge pricing up to 3X in the new policy regulating the cab operators. Both industry leaders, Uber and Ola, have been rebuked by Indian Courts in the past for irrational pricing.

Delhi High Court had banned the practice of surge pricing by app-based taxi aggregators in the national capital region in 2016.

Customers, who have often complained of irregularities in cab prices will not be pleased by the new regulations as it will allow the ride-hailing services to charge as much as three times the regular fares.

However, the cab aggregators have been defending the practice citing demand and supply issues and monetising the increased demands during periods of peak demand for cabs.

The new regulations will also accommodate rules according to the new Motor Vehicles (Amendment) Act, 2019. The recently implemented law has finally recognised cab aggregators by creating a new category for them.

Companies like Ola, Uber and Rapido who have been operating in the grey area due to lack of official norms will now be recognised as online intermediaries or marketplaces, which can be used by passengers to connect with a driver for transportation.

The proposed guidelines will also address the issues of passenger security, types of vehicles allowed and liability responsibility as provided in the new motor vehicle act. Supreme Court in July had asked the central government to draft a new law to regulate mobile app-based taxi service providers and address safety issues, particularly for women riders.

The new framework will be enforceable across India, but the state governments will be allowed to make changes as per the needs of that particular state.

In previous cases, states such as Madhya Pradesh and Tamil Nadu have banned the operations of bike taxis while Karnataka had implemented its own rules regarding surge prices.

The development was reported by ET.