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New rules for taxi aggregators in Karnataka

Turning down a major demand of tech-enabled taxi aggregators like Ola and Uber the Karnataka government has stood firm on its decision of not allowing surge pricing for these ride hailing services in its new policy.

The fare and other charges, the policy says, cannot be higher than the fare fixed by the government from time to time, which means the app firms must charge a fare within a band the upper limit of which is capped.

Says Transport Minister Ramalinga Reddy, “We have not allowed the surge pricing because the purpose of using the technology is to increase service standards for cab users at competitive fares. We have focussed this policy around this, and given a lot of importance to safety aspects."

Surge pricing or the practice of charging higher than normal fares during peak times has been a widely debated issue with proponents comparing it to the airline industry that follows similar practices and maintaining that it is essential to attract the drivers to hit the road during those difficult peak hours.

Consumers however claim that the excess fares collected in the name of surge pricing do not necessarily go to the drivers but instead to the company. They further add that while the app based services have been a great convenience and have changed the way people travel but they have to stop taking advantage of the commuters.

In its new policy the government has proposed a few measures which can help taxi aggregators to meet the demand of cabs by increasing the supply.

Firstly, the time period for which a driver was required to live in Karnataka before working for online taxi aggregator has been brought down to 2 years from 5.

Secondly, the government has withdrawn the age restrictions on the vehicles to qualify as taxis. Earlier, for a cab to enter the app-based taxi service, it had to be less than 2 years old and could stay in service only until the age of six.

The government has also slashed down the license fees and security deposit amount by 50%. Now, taxi aggregators have to pay a security deposit of Rs 1 lakh for 1,000 taxis, Rs 2.5 lakhs for up to 10,000 taxis and Rs 5 lakh for more than 10,000 taxis.

Similarly, aggregator license fee has also been halved to Rs 50,000 along with cuts on other various fees. These amounts are to be paid by the taxi aggregators, although Uber had objected to this practice saying that it is only a facilitator and not he operator of taxis.

The company had also demanded a reduction in the amount of security deposit which has been accepted by the government.

In another major decision aimed towards improving the condition of drivers of such services, the government has allowed the drivers to switch between the taxi companies according to their choice.

While these regulations are applicable only in Karnataka for now but soon other states may follow suit. There has not been any official reaction from any of the taxi aggregators to the new regulations.