Regulations to cap prices, number of Ola and Uber cabs

THE DELHI GOVERNMENT WILL BRING A POLICY TO FIX AN UPPER LIMIT ON FARES OF APP-BASED CAB AGGREGATORS, AND TO CURB SURGE PRICING

NEW DELHI: Cab-hailing platforms Ola and its American rival Uber will have to take an aggregator’s licence and comply with taxi rules in every state under the new motor vehicles law approved by the Union cabinet.

According to the amended act, Ola and Uber will also have to adhere to state laws.

For example, in Mumbai, a licence holder cannot have more than 4,000 cabs, and 2,500 in Delhi, and all taxis should be run on eco-friendly CNG. Right now there are 50,000-70,000 cabs in Delhi and Mumbai, each.

The cab business in India is worth `59,720 crore, but only 5% of that is with aggregators.

The act will also introduce a maximum retail price in order to curb deep-discounting, and the aggregator will be responsible for overall quality of services.

This will allow the Competition Commission of India to intervene if the price offered by a taxi aggregator is lower than the MRP for prolonged period.

Aggregators will be able to put cabs with city taxi licences on its platforms in Delhi and Mumbai. “Ola and Uber are using tourist taxi to run as city taxi,” said Siddharth Pahwa, CEO of Meru Cabs. “With discounts and incentives the intent is to smoke out competition and monopolise the market.”

The Delhi government will bring a policy to fix an upper limit on fares of app-based cab aggregators, and to curb surge pricing.

Surge pricing is a demandbased model that makes prices fluctuate, sometimes four or five times the base value. Ola and Uber were criticised for using the model during the second phase of the government’s odd-even road rationing scheme.

Surge pricing is not allowed, but it still continues. This prompted Madhya Pradesh to ban Ola and Uber recently.

At present, cabs follow a per-kilometre rate approved by the government. They cannot charge higher or lower than that. The policy will let aggregators charge between zero and the upper limit.

Delhi also proposes to make it mandatory for all cabs to have a fare meter. App-based taxis rely on the GPS installed in the driver’s phones to calculate the bill for every ride.