Uber, Ola may Face an FDI Hurdle Govt Plans Regulators for Taxi Aggregators
RADIO TAXI COS TO APPROACH DIPP Offering discounts seen as violation of ecomm marketplaces rules Agencies to set limits on surge pricing, define commercial car-pooling ops
New Delhi: In what could increase the woes of Uber and Ola, radio taxi operators plan to approach the government accusing app-based taxi aggregators of violating the latest guidelines around FDI in ecommerce marketplaces.
The Association of Radio Taxis plans to appeal to the department of industrial policy and promotion (DIPP) against app-based taxi aggregators for flouting a norm that bars marketplaces from offering discounts on their own as these have to come from the vendors.
The FDI norms released last month also sought to end “predatory pricing” by online firms.
Aggregators such as Uber and Ola, which are funded by foreign investors, are going against the new norms by directly influencing pricing, said Kunal Lalani, president of Radio Taxi Association of India. “They obviously qualify as an ecommerce marketplace since they have always claimed before various court cases that they are just a marketplace and not actually a taxi company; so the same rules should apply to them as well,” he told ET. Uber and Ola did not respond to an ET query seeking comments on the issue as of press time.
Lalani, who is also the chief executive of Mega Cabs, said Radio Taxi Association is currently seeking a legal view on the matter and plans to approach DIPP next week.
Uber and Ola are already in a tug of war with some state governments over the issue of surge pricing.
Siddhartha Pahwa, CEO of radio taxi operator Meru Cabs, said, “The way these companies are operating — giving huge incentives to drivers and discounts to consumers — they will ensure that all the other players in the market are killed.” He said these firms use surge pricing to recoup the deep discounts.
“We have to think about not today but about the scenario that the taxi industry will find itself in the next couple of years where the customers will have no option but to agree to the terms and conditions of these players since the rest of the competition will be dead,” Pahwa told ET.
As reported by ET earlier, Meru Cabs has also slashed its fares by 25% in Delhi during the ongoing 15day odd-even scheme to control private car traffic. The new rates will be effective in Delhi from Friday till mid-May and will be rolled out to other cities in due course.
Pahwa said that the spike in bookings will make up for the loss in revenues.
He along with Lalani was of the view that the government should put an end to surge pricing by putting an upper cap on per kilometre rates.
As reported earlier, the Arvind Kejriwal government in Delhi is working on a policy that seeks to put upper and lower caps to the prices charged by app-based operators forcing them to keep taxi fares within a certain range in Delhi.
The Delhi government and app-based taxis have been at odds for some time now. The government wants to regulate them as transport operators, but Ola and Uber say they just provide technology for taxi drivers and commuters to connect and aren't transport companies.
Kejriwal said earlier this week that this government would act against Ola and Uber, calling surge pricing “daylight robbery” and said “no responsible government can allow it”.
Following the government threat and with many commuters complaining about the practice, Uber and Ola this week suspended surge pricing in Delhi. New Delhi: The government proposes to set up public transport regulators in each state to oversee the functioning of cab aggregation companies, define commercial car-pooling to remove ambiguity, set limits on surge pricing to protect customers and make KYC mandatory to ensure passenger safety.
The Centre and the States took stock of surge pricing by taxi aggregators Uber and Ola after a raging debate on the practice that was implemented briefly in the capital during the odd-even traffic scheme currently under way.
Top officials of State transport departments deliberated upon the need to put in place a framework for the dynamic pricing mechanism, which enables these cab companies to charge higher fares when demand is high.
“The issue of surge pricing was raised,” said an official who was present at the meeting, called by the road transport and highways ministry to discuss improving the ease of transport and road safety.
States such as Delhi and Karnataka have already imposed restrictions on surge pricing. The Centre is of the view that there should be a cap on surge pricing and it should not exceed 40-50% of the base fare.
States including Rajasthan and Gujarat have echoed the same views, the official said. The Centre proposed setting up a public transportation regulatory authority at the state level to prepare norms for aggregators and provide clarity in transportation rules.
“The public transportation sector has been disrupted by these technology platforms,” a senior government official said.
The Centre will also prepare a definition of commercial car-pooling in the Motors Vehicles Act.
“We’ll be making passenger KYC (know your customer) mandatory for all such services,” a senior official said.