DH Deciphers | Cab aggregator guidelines: Will rides become cheaper and safer?

The Ministry of Road Transport and Highways recently issued the Motor Vehicle Aggregator Guidelines 2020 in order to bring app-based cab aggregators such as OLA and Uber under the regulatory framework. The guidelines deal with a number of matters such as issuing licences to transport aggregators, training drivers, regulating fares (and surge pricing) and ensuring passenger safety. Let's take a look at them and what they mean for aggregators, drivers and passengers:

What was the need for the guidelines? Weren't cab aggregators regulated so far?

The guidelines follow the Motor Vehicles (Amendment) Act, 2019, which had included a new category — cab aggregators. Cab aggregating has grown rapidly in India, which not only has the homegrown ride-hailing firm OLA (headquartered in Bengaluru) but also accounts for about 11% of US cab aggregator Uber's global rides annually. But many issues related to cab aggregating had remained unclear. The guidelines have brought clarity.

Do the guidelines fix the fares?

They do but only in a broad sense of the term. For example, the guidelines stipulate that the base fare will be the city taxi fare linked to the wholesale price index. Since the WPI keeps changing, the fares are expected to fluctuate. Passengers shall be charged for at least three kilometres to compensate for dead mileage, distance travelled and fuel utilised for the pick-up.

Aggregators can charge between 50% and 150% of the base fare, with the latter being the limit of the surge pricing. In states where city taxi fares have not been determined, Rs 25/30 will be the base fare.

What do the guidelines mean for aggregators?

The guidelines stipulate what aggregators should do and what are the essentials for every cab. For example, the app app should be accessible in English and Hindi along with the official language of the relevant state. Every cab must have a panic button linked to the control room of the aggregator as well as a fire extinguisher. In case the driver plies on a different route, the same should be notified in the app and the control room should immediately communicate with the driver.

The aggregators can't make too much profit. Their commission should not be more than 20%.

Aggregators must store the ride details for at least three months and up to 25 months, and make them available to law enforcement authorities.

The aggregator's licence can be suspended if there is a 'systemic failure' to ensure the safety of the rider and the driver, repetitive instances of financial inconsistencies with regard to the fares charged to riders, unjustified imposition of surge pricing, 'severity of financial swindling', etc.

In a nutshell, the guidelines call for greater control of the cab aggregating sector.

What do the guidelines mean for drivers?

Most of the things will bring relief to drivers. They will get 80% of the fare, health insurance of at least Rs 5 lakh with 2020-21 as the base year (it will increase it by 5% each year) and a term insurance of Rs 10 lakh. Aggregators have to pay for the insurance.

Drivers should not work for more than 12 hours a day even if they are attached to more than one aggregator. Aggregators should develop a mechanism in their apps for this purpose and make sure drivers get at least 10 hours of rest. While this guideline is intended to ensure driver and passenger safety, it may hurt drivers' earnings in the long run.

What do the guidelines mean for passengers?

The guidelines ensure passengers have safe rides and pay reasonable fares. While linking the base fare to the WPI may make cab rides a tad costlier, the cap on surge pricing will ensure people don't pay a bomb for intra-city travel.