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Modi Government Frames New Rules to Protect the Interests of Passengers and Cab Drivers in Aggregator Apps

Cab aggregators like Ola, Uber etc. have become very popular in India in recent years and have introduced the concept of shared mobility in India. The government has now come out with comprehensive regulations regarding cab aggregators which protect the rights of both the passenger as well as cab driver.

Addressing Concerns of Passengers and Drivers

While Cab Aggregator Apps have enabled people to access transports services in an easier manner and also provide much more productive work for cab drivers, there were few issues faced by both passengers as well as cab drivers that needed to be addressed.

Passengers concerns included the fact that due to peak hours or occasions like festivals, prices skyrocketed especially due to the inclusion of surge pricing which went to extent to 300-400%. There were also complaints that while stiff penalty is imposed on passengers if they cancel after confirming a booking, the same was not applicable to drivers who cancel a booking after the confirmation.

Drivers in aggregator apps were also demanding higher wages from their rides, alleging that most of the fare is being taken by the company.

To address all these issues government has come with comprehensive regulations with which all cab aggregators have to comply with.

Surge Pricing Capped, Commissions Fixed

Surge prices cannot be more than 50% i.e. 1.5x the base fare, and the aggregator cannot reduce prices 50% below the base fare too thus ensure fair competitive field.

Base fare has also been standardised at ₹25-30 in states where the fare has not been determined by the local government. The base fare varies from state to state and local governments need to fix base fare for other modes of transport aggregated by such apps, for instance, bikes.

Addressing the issue of cancellation charges, the new rules mandate that a driver who cancels a ride without a valid reason set by the aggregator must pay a penalty of 10% of the fare, not exceeding ₹100. A similar charge will be levied if the rider cancels the trip, which will be split between the driver and the aggregator.

Ensuring that the drivers are paid adequately, Government has mandated that drivers will receive at least 80% of the fare, while the aggregator can keep the rest, under the new rules.

Safety Regulations Issued

To ensure the safety of both passengers and drivers, the new rules mandate that a driver is not logged in for more than 12 hours on a given day. There also has to be a mandatory 10-hour break in case the driver logs in for more than 12 hours on a given day.

Aggregators must ensure health and term insurance for each driver for at least ₹5 lakh and ₹10 lakh, respectively, with the base year of 2020-21 and increase it by 5% every year.

Aggregators must also set up a 24×7 control room to monitor the movement of all vehicles. The app must display a call centre phone number and email address at all times. Special regulations to ensure safety of women passengers have also been issued.

For getting a licence, the aggregator will also have to ensure compliance on the part of drivers, which include valid proof of identity, driving licence, minimum driving experience of 2 years, and police verification.

The driver of a vehicle should also not have been convicted within the past 3 years for driving under the influence of alcohol. Violation of any of regulations will attract a fine of ₹1 lakh and cancellation of license of aggregator app

States Can Cancel License of Aggregator In Case of Violations

States can also suspend the aggregator’s licence if there is ‘systemic failure’ to ensure the safety of the rider and driver, repeated financial inconsistencies on fares, the unjustified imposition of surge pricing and ‘severity of financial swindling’, among others.

These rules have been applied now under the Motor Vehicles Amendment Act, 2019 which carved out ‘aggregators’, a new category of digital intermediaries or marketplaces, which passengers can use to connect with a driver. The rules will apply to all vehicles, including bikes, cars, auto-rickshaws, buses and e-rickshaws.

Before the 2019 amendment, there were no uniform guidelines for aggregators and the rules differed from state to state, leading to occasional regulatory hurdles. With these new rules, concerns of passengers regarding surge pricing and safety as well as demands of drivers for higher wages and safety net have been taken care by the Government.