Centre allows Ola, Uber to hike ride fare during peak hours; permits bike taxis

The Centre has allowed cab aggregators such as Ola and Uber to charge up to twice the base fare, as against the 1.5 times earlier, during peak hours and not less than 50 per cent during non-rush hours.

This change is part of the newly introduced Motor Vehicle Aggregator Guidelines (MVAG) 2025. The new guidelines specify that state governments will notify the base fare for different categories of vehicles, including auto-rickshaws and bike taxis.

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Ride cancellation penalty

The Ministry of Road Transport and Highways on Tuesday (July 1) also said 10 per cent of the fare not exceeding Rs 100 shall be imposed on a driver if a ride is cancelled without a specified reason.

Such a penalty will be split between the driver and the aggregator. A similar penalty will be imposed on a passenger for a similar cancellation.

The states have been advised by the central government to adopt the revised guidelines within three months of the date of issuance. They are also allowed to include provisions in addition to the ones already specified in the revised norms.

Fare revision

The fare revision is reportedly to ensure that consumers are not burdened during periods of surge in traffic, while ensuring that aggregators do not undercut competition by offering steep discounts.

The Transport Ministry addressed the regulation of fares, saying, "the fare by the State Government for the respective category or class of motor vehicles, shall be the base fare chargeable to passengers availing services from the aggregator", under sub-clause 17.1 of the guidelines.

The government also said "the aggregator shall be permitted to charge a minimum of 50% lower than the base fare and a maximum dynamic pricing of two times the base fare specified under sub-clause (17.1) above".

"The base fare chargeable shall be for a minimum of three (3) kilometres to compensate for dead mileage, including the distance travelled without a passenger and the distance travelled and fuel utilized for picking up the passenger(s)," it added.

The guidelines also mentioned that the aggregator can charge the fare only from the point of origin of the journey to the destination where the passenger is dropped off.

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Driver and passenger safety

The Union government said the new guidelines attempt to provide a light-touch regulatory system while attending to issues of safety and security of the user and the welfare of the driver.

For the safety of passengers, the Centre has specified that the aggregator must ensure vehicle location and tracking devices (VLTDs) are installed in vehicles and the feed is received by it as well as linked to the integrated command and control centre of the state government.

The aggregators should also conduct an annual refresher training. The guidelines also specified that drivers whose rating falls below five percentile among all drivers in terms of duration of engagement with the aggregator will compulsorily undergo refresher training every quarter.

If such drivers fail to do so, they won't be allowed to continue through the aggregator. Furthermore, the government said the aggregator shall ensure a minimum amount of Rs 5 Lakh as insurance for passengers.

Also Read: 'Bike taxis are a necessity': Aggregators argue in Karnataka HC

Bike taxis approved

The Union government for the first time also allowed the use of non-transport (private) motorcycles for passenger journeys through aggregators, subject to state government approval, providing long-awaited regulatory clarity for India's shared mobility sector.

"The state government may allow aggregation of non-transport motorcycles for journey by passengers as shared mobility through aggregators resulting in reduced traffic congestion and vehicular pollution, along with providing inter alia affordable passenger mobility, hyperlocal delivery, creating livelihood opportunities,' "the guideline said.

According to the guideline, the state government may, in exercise of its powers under sub-section (3) of Section 67 of the Act, permit aggregation of non-transport motorcycles for journey by passengers.

This move brings relief to bike taxi operators like Rapido and Uber, who have long operated in a legal grey area, especially in states like Karnataka, where a recent ban on bike taxis had led to widespread protests.