Ola,Uber like taxi aggregators to be under Motor Vehicles Act? Will surge pricing go?

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New Delhi | Updated: May 6, 2016 7:22:14 AM

Surge pricing refers to the practice of a firm raising the price of its services when the demand is high; prices tend to fall when the demand ebbs.

TaxiIf brought under the Act, a fare limit would be set for these companies beyond which they would be prohibited to charge from the commuters.

Centre is looking to frame a policy soon to regulate taxi aggregators such as Ola and Uber under the provisions of the Motor Vehicles Act, 1988, that govern the transportation sector.

Essentially, this would prohibit these service providers, which often flout rules in the name of being an aggregator and not a service provider, from plying in a city without city permits and resort to surge pricing, which is rampant now.

Surge pricing refers to the practice of a firm raising the price of its services when the demand is high; prices tend to fall when the demand ebbs. If brought under the Act, a fare limit would be set for these companies beyond which they would be prohibited to charge from the commuters.

Following a meeting with the taxi aggregators and radio taxi providers here on Thursday, a senior transport ministry official said the Centre’s policy, to be unveiled soon, is not aimed at making life difficult for these companies, as many are dependent on such services, but to ensure that they also follow rule of the land, like other service providers do.

The Centre’s policy, however, would be like a guiding principles for the states since transport is in the concurrent list.

The official said since these companies are not governed under the Motor Vehicles Act, a large chunk of their fleet having all-India permit often ply in the city without having the city permits. A taxi having city permit can ply point-to-point in a city. However, a taxi having all-India permit—though can pass through a city—it cannot ply point to point within a city on a regular basis.

“However, the flouting of the rules is rampant among taxi aggregators. Hence, the ministry feels that these companies should be regulated with a clear policy. We have asked them to give their version on the issue at the earliest. We will frame the policy soon after,” the official said.

The official also said such companies often flout the fuel rules set by respective states which should be done away with. Among the taxis enabled by service providers through mobile apps plying in the Capital region, around 30,000 are diesel-run.

Road transport and highways minister Nitin Gadkari had earlier said taxi aggregators were required to be regulated and should be governed by the laws under the Motor Vehicles Act since they are in the business of transportation.

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