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

The Economic Times - - Companies: Pursuit Of Profit - Surabhi.Agar­wal @times­group.com Rajat.Arora@ times­group.com

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.


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