Government Rules in India Regarding Ola and Uber

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In India, the ministry of road transport has issued guidelines for ride hailing services such as Uber (Uber Technlologies Inc.) and Ola (ANI Technologies Pvt. Ltd), classifying them as on-demand information technology-based transportation aggregators and not taxi companies, although it is up to the states to accept or object this.

The guidelines come as a shot in the arm for Ola and Uber that have all along claimed that they serve as a bridge between passengers and drivers by leveraging technology, and are therefore not taxi companies.

Mint has reviewed the guidelines.

According to them, the aggregators must not own or lease any vehicle, employ any drivers or represent themselves as a taxi service, unless also registered as a taxi operator. In some countries, this kind of policy is not necessary, like in Netherlands, with their taxi Schiphol

Taxi operators are to maintain a minimum fleet size, office space and parking space for all taxis, among other requirements.

The ministry’s guidelines should clear the air surrounding ride-hailing services after a driver hailed through the Uber app raped a woman passenger in December 2014.

“The government should draw a fine balance on how to regulate these companies. The state government’s guidelines would be an additional layer of regulatory requirements,” said Sandeep Ladda, partner and national leader of the technology and e-commerce practice at PricewaterhouseCoopers India.

The Maharashtra government has issued a City Taxi Scheme 2015, encompassing taxi service providers as well as aggregators of taxis, which could deal a blow to Ola and Uber. The regulations state that licensees should maintain a fleet of a minimum 1,000 and a maximum of 4,000 taxis, a cap which may restrict the businesses from scaling up in Mumbai, a key market.

To be sure, neither Ola nor Uber forces drivers to put in fixed hours or prevent them from being present on multiple platforms. However, a majority of the drivers are drawn towards these platforms for incentives, which are over and above the fare charged from the passengers. The companies have incentive structures based on the number of rides, which depend on the number of hours put in by the drivers as more rides require longer hours.