Govt proposes capping surge pricing by cab aggregators like Ola & Uber at 1.5 times of base fare

By: |
November 27, 2020 10:28 PM

"The aggregator shall be permitted to charge a fare 50 per cent lower than the base fare and a maximum surge pricing of 1.5 times the base fare," said the Motor Vehicle Aggregators Guidelines, 2020 issued by the Ministry of Road Transport and Highways.

In states where the city taxi fare has not been determined by the state government, an amount of Rs 25/30 shall be the base fare for the purpose of fare regulation, the guidelines said.

The government on Friday proposed to cap surge pricing charged by cab aggregators like Ola and Uber at 1.5 times of the base fare.

The development assumes significance in the backdrop of a long-pending demand of citizens to cap the pricing of ride-hailing services.

“The aggregator shall be permitted to charge a fare 50 per cent lower than the base fare and a maximum surge pricing of 1.5 times the base fare,” said the Motor Vehicle Aggregators Guidelines, 2020 issued by the Ministry of Road Transport and Highways.

This will enable and promote asset utilisation which has been the fundamental concept of transport aggregation and also substantiate the dynamic pricing principle which is pertinent in ensuring asset utilisation in accordance with the market forces of demand and supply, the ministry said.

The driver of a vehicle integrated with the aggregator shall receive at least 80 per cent of the fare applicable on each ride and the remaining charges for each ride shall be received by the aggregator.

In states where the city taxi fare has not been determined by the state government, an amount of Rs 25/30 shall be the base fare for the purpose of fare regulation, the guidelines said.

Similar fare fixation shall be done by the state government of other vehicles integrated by aggregators with the relevant state, the ministry said.

Research firm RedSeer said that the guidelines for cab aggregators which seek to cap surge pricing at 1.5X among other provisions are expected to have mixed impact for the sector that will benefit from improved safety regulations but could have “negative” fallouts for drivers’ earnings.

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