Karnataka Government Lays Down Rules For Taxi Aggregator Services, Ends Surge Pricing

The Karnataka Government has put a stop to the surge pricing for app-based ride hailing services such as Ola and Uber, under the new policy for tech-enabled taxi aggregators.

According to the new policy, the fare and other charges cannot be higher than the fixed fare by the government. Also, no passenger will be allowed to be charged for dead mileage and the fare shall be charged only from the point of boarding to the point of alighting.

Transport Minister, Ramalinga Reddy, told ET, “We have not allowed the surge pricing because the purpose of using the technology is to increase service standards for cab users at competitive fares. We have focussed this policy around this, and given a lot of importance to safety aspects.”

Apart from pricing, other changes were implemented in the new policy. Inc42 has a copy of the document and some of the key points are:

• Only a person who has a valid licence and is living in Karnataka for two years, and with minimum driving experience of two years can drive a cab for an app service.

• The government has dropped the age restriction it had proposed for vehicles to qualify as taxis. Earlier the government permitted only the cabs that are less than two year old could enter the app-based ride hailing segment and they could stay in service until the age of six.

• The government has also allowed taxi permit holders to switch between ride hailing apps as per their choice. In the past, the app-based cab aggregators were complained of facing losses because of drivers switching between two operators, and thus came up with a monthly/weekly incentive to curb switching between operators.

“We came to know that app-based firms were forcing drivers (permit holder) to work only for them. We have, however, recognised a driver’s freedom to choose the app he wants to associate with,” the transport minister said.

• The government has reduced the licence fee and the security deposit by half, payable by ride hailing services. The app firms will now pay a security deposit of INR 1 lakh for a fleet of up to 1,000 taxis, INR 2.5 lakh for up to 10,000 taxis and INR 5 lakh for more than 10,000 taxis.
• The fee for grant of aggregator licence is halved to INR 50,000, the fee for renewal of license is will be INR 25,000, similarly the fee for other services have been reduced.
• The new rules have mandated that the cabs should have GPS/GPRS facility with a provision of a panic button for the use of the passengers.

To fix responsibility on the aggregator and the cab driver for any violation of the permit condition, the government has said that if any untoward incident occurs during the course of a ride, “the licensee (aggregator) should inform the same to the licensing authority (transport department) as well as to the jurisdictional police immediately.”

Apart from Uber and Ola, Meru, Mega, Bangalore Taxi, KSTDC, CarzOnRent and Spot Taxi currently operate as ride-hailing services in the state.

Prior to this, in February 2016 the Karnataka government suggested new rules, in order to level the competition between all cab operators in the state.