Govt revises ride-hailing rules: 2X surge cap, cancellation fee, and push for bike taxis

The Ministry of Road Transport and Highways has announced the Motor Vehicle Aggregator Guidelines 2025, bringing in new rules for ride-hailing platforms like Ola, Uber, and Rapido. These rules officially allow surge pricing, support bike-taxi services, and set clear guidelines around driver commissions, cancellations, and compliance.

The most significant provision is the legalization of dynamic pricing, allowing platforms to charge up to 2X the base fare during peak demand and offer up to 50% discounts in off-peak hours. Base fares will continue to be set by state governments, but platforms will now operate with formal backing to modulate pricing in real time.

In a major boost to two-wheeler aggregators, the central government has cleared the path for bike-taxi operations under Clause 23 of the Motor Vehicle Aggregator Guidelines 2025. The revised rules allow state governments to permit non-transport motorcycles, typically personal two-wheelers, to be used for shared mobility, offering flexibility in issuing daily, weekly, or other forms of authorisation. 

This comes as a notable development, especially in states like Karnataka, where legal hurdles have stalled bike-taxi services. Bike taxi operators like Rapido, Ola, and Uber were recently directed to suspend their operations in Karnataka following a High Court order.

Beyond fare and fleet flexibility, the guidelines lay out clear revenue-sharing rules. According to the latest guideline, aggregators must ensure that drivers receive at least 80% of the fare for trips conducted using their own vehicles, while they may retain up to 20% as commission. In cases where the aggregator owns the vehicle, the driver’s minimum share is set at 60%. These rules are expected to bring more transparency and fairness to driver payouts.

The policy also addresses ride cancellations, allowing aggregators to impose a 10% penalty (capped at Rs 100) on both passengers and drivers who cancel without a valid reason. Platforms are required to clearly list acceptable reasons on their apps.

On the compliance front, aggregators will need to meet a host of new requirements: onboarding only police-verified drivers, ensuring 40-hour induction training, maintaining 24x7 control rooms and helplines, and fitting vehicles with AIS 140-compliant GPS devices and panic buttons. All apps must be available in regional languages, and companies are expected to adhere to India’s new data protection laws.

The transport ministry has allowed state governments to implement the new rules in three months. While they can make changes to suit local needs, the guidelines aim to bring consistent regulations across the country, giving much-needed clarity to mobility startups dealing with different rules in each state.