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Cab aggregators shouldn’t be banned from car pooling

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For the transport department in Bengaluru to order Ola and Uber to stop carpooling is a regressive anti-consumer move, reeks of over-regulation and high-handedness and protectionism. The Economic Times reports that app based cab aggregators have been given three days to stop carpooling and shared cabs, because these services are in violation of the Motor Vehicles Act. The report makes the following points:

1. The transport commissioner is quoted as saying that “cabs cannot pick up and drop passengers at multiple locations before closing each trip”, and the services are in violation of the Motor Vehicles Act.

MediaNama’s Take: What the transport commissioner is doing here is going against what a committee set up by the Ministry of Road Transport and Highways had recommended, and sent to Principal Secretary/Transport Secretaries of each state. That report, recommends

Sharing of Seats: To provide cheaper travel solutions to the common man and to maximize utilization of vehicles in eco-friendly way, it is recommended that seat sharing should be permitted in the taxis operated by aggregators subject to the express consent of the passengers.”…”With the objective of promoting new forms of public transport, it is imperative that more commercial vehicles and shared mobility assets are added in our cities.”…”This low utilization – high ownership model is unsustainable in the long run and requires a policy intervention to encourage shared cars over private vehicle ownership”


The archaic Motor Vehicles Act needs to be amended.

2. BMTC’s Managing Director complained that carpooling was impacting BMTC revenues.

MediaNama’s take: the idea behind policies should be to provide consumers with options, and convenience. Protecting BMTC’s revenues should not be a policy consideration: instead, it should be a trigger for BMTC to improve its own services, and consider providing feeder services that help users travel beyond moving from bus station to bus station.

3. The “contract carriage license” requires pickups and drops between two points, without any pickups on the way.

MediaNama’s take: If this is the case, then this license needs to be amended to allow this. We need to focus on better utilisation of capacity, and if there are services which allow multiple pickups on a route, they should be encouraged, not banned. This should not be the exclusive mandate of the state owned transport corporation.

4. A regional transport officer is quoted as saying: “How can we allow a cab being used by a woman to pick up two other men, who are strangers to the woman. How do we ensure security in such situations”.

MediaNama’s take: The transport officer in question should perhaps read the MoRTH report, which makes the following recommendations:
– “The taxis should be mandatorily fitted with GPS Panic button devices as mandated by the Central or State Governments that connect to the Police control room or any other portal prescribed by the state government. The States may mandate any additional gadgets/ devices to ensure safety and security of the passengers. The committee proposes such mandates, if any, should be reasonable and should not impose unnecessary costs to the operator/ owner so as to render the operations unviable.”
– “Women Drivers: The State Government should take appropriate measures to promote skilling programs and facilitate removal of entry costs so as to encourage more women to join the mobility industry as commercial drivers.”


The regulatory uncertainty which companies like Uber and Ola have to face speaks poorly of how fragmented policy making is; even after the principles of liberalising taxi licenses have been decided by a committee, the transport commissioner in Bengaluru is going against these principles. This move is symptomatic of what the committee report refers to when it says “After reviewing the existing framework, the Committee is of the opinion that the taxi permit regime in India is highly onerous and is limiting the growth of the taxi and shared mobility industry.”

One of the things that MoRTH, and Uber and Ola, missed out on was the actual sharing economy bit; in case of the guidelines, the aggregators are largely being seen as cab aggregators, instead of an actual sharing economy scenario, where private individuals, without having to pay a license fee to the government (which is essentially rent-seeking), can moonlight as drivers, or carpool for fee. That remains unregulated for now, which is why BlaBlaCar can operate. At some point in time, though, regulators will start looking at that too.booking

Hopefully, carpooling/sharing will not be banned, and any order will be withdrawn, and guidelines in line with the committee recommendations will be implemented.

Summary of the MoRTH report recommendations (download here)

1. There is a need for national level policy intervention to promote shared mobility over private vehicle ownership to reduce congestion and pollution in urban agglomerations.

2. States should facilitate unhindered grant of permits for City Taxi and AITP without any restrictions on numbers.

3. The City Taxis may continue as street hailing taxis. However, they may also be allowed to ply on the aggregator platform, if they so desire.

4. To reduce delays and to embrace digital technology online grant of the permits is recommended. It is further recommended to allow online conversion of compliant personal vehicles to commercial taxis on payment of requisite charges so as to facilitate use of idle assets.

5. The AITP taxis may be allowed to operate for all purposes except as street hailing taxis. These vehicles would have to comply with the fuel specified for the city while operating for aggregators for intra city transport on long term hiring/ leasing, for ferrying employees of IT Companies and call centres.

6. Taxis must comply to the stipulations laid down by the transport department with regard to safety & security of the passengers. The drivers’ photo identity along with the registration number of the taxi should be clearly visible to the passengers. The taxis must also have a valid permit, insurance, fitness certificate and PUC at all times. The Taxis must also be fitted with GPS.

7. The committee strongly recommends to avoid unreasonable restrictions that will make taxi operations economically unviable, thereby causing inconvenience to the citizens and increased use of personalised vehicles

8. There should be no restrictions on the choice of the operator or aggregators with regard to composition of the fleet, i.e. deluxe and economy

9. The Aggregators should get the App validated from Standardisation Testing and Quality Certification (STQC) or any other agency authorised by Ministry of Electronic and Information Technology (MEITY). Aggregators should take measures including a firewall for the security of the personal data of the passengers.

10. Based on the Excise duty criteria and the fact that over 87% of the cars are less than 4 metres length, the Taxis may be segregated into Economy (less than 4 m) and deluxe (more than 4 m) categories. The Committee strongly recommends that the tariffs of Deluxe Taxis should not be regulated and be allowed to be determined by market dynamics.

11. The committee recommends range bound dynamic pricing to be allowed to effectively match demand and supply. It is felt that the maximum tariff may be permitted up to three times the minimum tariff. To increase the availability of taxis during the night time, the committee recommends that maximum tariff may be allowed up to four times that of minimum tariff from 12 midnight to 5 am in morning. This would ensure adequate supply during peak hours and at night. Alternatively, the aggregators may be asked to provide the minimum fare that would be charged from the customers and the State Transport Department may fix a multiplier to cap the maximum fare. This would help in meeting the peak load requirements of the taxi users.

12. The Aggregators should have a physical presence in the respective State of operations. They should provide a grievance redressal mechanism and should also have an emergency response centre to handle SOS alerts by passengers. The App should also have adequate safety features for the passengers such as sharing the ride details.

13. In order to provide cheaper travel solutions and to reduce the number of cars on road, sharing of seats may be allowed on aggregator based taxis with express consent of the passengers.

14. States may place appropriate cap on the duty hours of drivers in the interest of road safety and in consonance with labour laws.

15.The states should promote bike sharing and e-rickshaws for last mile connectivity.

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