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The Indian Ministry of Road Transport and Highways has shifted much of their focus towards motor vehicles aggregators since last year. Recently, the Union government has issued the Motor Vehicle Aggregator Guidelines for the country as per the requirements and provisions of the Motor Vehicles (Amendment) Act, 2019. It aims to regulate and formalise the cab aggregator segment.

According to these guidelines, aggregators are identified as ‘digital intermediary or market place’ for a passenger to connect with a driver for transportation. In India, the segment is mainly dominated by two companies - Uber and Ola. Uber is an international company operating in India. The guidelines have launched a number of procedures in regard to granting licences, compliance with regard to vehicles, commission, regulation of surge and fares etc.

What does it say?

The guidelines have notified that the aggregators will have to give at least 80% commission of the fare to the drivers and can claim only 20%. On cancellation of a booked ride without valid reason, a penalty of 10% of the total fare can be levied which should not exceed `100. The amount must be shared between the driver and the aggregator.

Suvamoy Kar, a cab owner linked with both Ola and Uber, told BE, “In reality the cab aggregators take around 30% commission and trade unions including the Centre of Indian Trade Unions (CITU) have been demanding to curtail it. Additionally, cab aggregators take some hidden charges that are marked as convenience charges. Eventually, to save our fuel we are being forced to turn the car’s air conditioning off during the rides. Recently, as the situation has started to normalise, the companies obliged us with a token `60 charge if we take a pick-up from the airport in Kolkata. They are claiming that this amount will be refunded but the condition is completely different. So, we are avoiding airport pick-ups. Since the last one month, the companies are mostly giving us long pick-ups and if we do not accept, our accounts get be blocked. Hence, a considerable section of the cab owners is thinking to leave the sector. If these guidelines are followed, it will greatly help us.”   

The guidelines also include data protection regulations. For example, aggregators will have to store its vital data for three months to one year. The data will have to be available in a server located in India. Also, these kinds of data should not be disclosed without proper consent of the customers.

Additionally, the guidelines stated that drivers will have to be aided with at least `5 lakh of health insurance and that should be increased by 5% on a yearly basis. The pandemic situation has triggered this need. To protect women passengers in pool-rides, the aggregators will have to provide an option to pool only with women co-passengers.

Now on, the aggregators will have to consider the city taxi fare determined by the Wholesale Price Index (WPI) as their base fare for the customers. For states operating without a particular city taxi fare, the base fare will be `25 to `30. Additionally, the surge price should not exceed 1.5 times that of the base fare. 

Objectives so far

The guidelines want to utilise the digital cab business for larger public interest considering employment and transportation and in a cost-effective manner.

Cab aggregators have been growing sharply in India for the last few years. The number of users has increased steadily this year even amidst the pandemic. Additionally, the revenue from the segment is expected to touch a Compound Annual Growth Rate (CARG) of 22.9% during 2020-2025 and the user penetration can also reach 22.8% in 2025. The decision to formalise the business is economically essential for the country.