Indian government set to frame rules for ride-hailing firms

Photo: Reuters

Upcoming rules governing taxi aggregators such as Uber and Ola will address the types of permissible vehicles, surge pricing and safety of women passengers, two people aware of the matter said. The rules will also clarify whether such vehicles will be owned by the driver or the aggregator, and specify their liabilities.

Aggregators in various states have attempted to bring bikes, cars, auto-rickshaws and buses on their platforms, sometimes running into regulatory hurdles. For example, Karnataka does not allow bike taxis, while Haryana does. Also, in the absence of specific rules on cab aggregators, many states regulate them as fleet cab operators.

The new Motor Vehicles (Amendment) Bill, 2019 creates a new category of cab aggregators, addressing some of these issues. It recognizes and defines aggregators as digital intermediaries or marketplaces, which can be used by passengers to connect with a driver for transportation.

The central government will meet all stakeholders in the industry in the next few months and frame a broad set of rules, said the people cited earlier.

“Even the Supreme Court (on 31 July) has asked the central government to consider bringing a law to regulate taxi aggregators to ensure women’s safety. Now that the motor vehicles law is (almost) in place, we need to frame the rules soon,” said one of the two officials cited earlier, both of whom declined to be identified.

Cab aggregators have witnessed significant growth in the last few years in India, following the entry of San Francisco-based ride hailing giant Uber and the rise of home-grown Ola, owned by ANI Technologies Pvt. Ltd.

The rules may cover surge pricing, which kicks in at times of high demand or low cab availability. Aggregators may find it difficult to raise prices exorbitantly through surcharges during peak hours or in times of adversity such as a transport strike or heavy rain.

Taxi-hailing companies claim fares surge when a large number customers from the same location try to book cabs, overshooting the number of vehicles available. Cab aggregators claim that surge pricing encourages drivers to go where the demand is.

The rules will clarify whether the aggregator or the driver will be held responsible in case of an accident, crime or any other incident during the ride.

“For instance, if a customer leaves behind any belonging in the vehicle, it has to be clear whether the onus is on the driver or the company that is providing the services. Such issues also need to be discussed,” said the government official cited earlier.

The motor vehicles law will empower the central government to frame guidelines for these companies.

Under the proposed law, taxi aggregators can seek a licence from the state government, as transportation is a state subject.

At present, several states lack norms to regulate cab aggregators. Taxi permits are issued by state transport departments and, as a result, every state has different guidelines, which could include fare and the number of passengers, among others.

Queries emailed to the spokespersons of the Union transport ministry, Ola and Uber on Friday remained unanswered.

According to Rameesh Kailasam, chief executive officer of think tank IndiaTech, legal recognition for aggregators is a big positive for both the government and the aggregators, as regulations bring in legitimacy, along with responsibility and liability while providing ride services.

“It will be interesting to see if India adopts a broad national template for states to follow and adapt, or if the Centre will allow states to come up with or revise their existing policy. A broad single national template would be the best way out as it will be easier for companies to operate across several states,” said Kailasam.

The Rajya Sabha on Wednesday passed the proposed amendments to the Motor Vehicles (Amendment) Bill, 2019. The bill was passed by the Lok Sabha on 23 July.

However, the motor vehicles bill has to be approved by both houses of Parliament again this week to incorporate minor changes, following which it will be sent to the President for his assent.

This article was first published on livemint.com.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.