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Ola wants regulation of predatory pricing in Maharashtra


Ola has said there is “the need for adequate regulation to curb predatory pricing and capital dumping in the interest of co-existence of all players in the ecosystem,” in its suggestions to the Maharashtra government for the Maharashtra City Taxi Rules 2016. Ola also stated a need for reviewing the permit cost for vehicles above 1400 cc and Rs 2.61 lakhs which would mean an additional 30% of ‘capital burden’ for its drivers and make its services costlier for users.

The online cab aggregator added that choice of the vehicles should be left to the drivers ‘and demand from consumers’, in response to the rule which states that at least half of the total taxi fleet should be of engine capacity 1400 cc or more.

Interestingly, yesterday, Ola founder Bhavish Aggarwal said that Uber should expect government intervention with respect to predatory pricing. The report further quoted Aggarwal as saying that Ola made aggressive fare price cuts “only in response to similar steps by Uber,” and that “dumping money into a country because you have profitable markets elsewhere is against [World Trade Organisation] principles.” Aggarwal was also quoted as saying that Ola’s fares in India were an average 20% higher than Uber’s in cities where Uber wasn’t present.

Uber says regulations are more harmful than useful

Uber, on the other hand, has asked for an open pricing regime where there are no upper limits of the fares companies can charge its users for transportation from point A to B. “A price floor will prevent us from offering affordable services and a cap on pricing will make the service unreliable due to higher wait times,” it said in its letter to the government. Uber also asked its users to sign a petition asking the government to reconsider the new guidelines. Last month, Amit Jain, Uber’s India president also called for deregulation of the app-based transport industry in India.

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Call for regulation from most players

Ola isn’t the first company to suggest regulation of the online cab booking industry. Last month, the Association of Radio Taxis (AoRT), an association representing transportation radio taxis, also suggested regulating the industry (for Delhi) to include online cab aggregators. The body said asked for a uniform law in the city, price caps on fares, no predatory pricing, minimum fare not lower than direct or indirect cost, change in taxi categorisation based on engine capacity and state domicile for drivers. A Kerala online taxi drivers union also asked for a minimum wage from Uber. MagicSewa, an online cab aggregator, has also filed a case against Uber for surge pricing. In Mumbai, taxi and autorickshaw unions have threatened to go on a strike again from 10th of November if online cab aggregators are not regulated in the state of Maharashtra.

Also read:
– On regulating the sharing economy in India
– Uber in Pakistan: A Lesson in the Flaws of the Sharing Economy

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