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In major move, govt caps commissions, surge pricing charged by Ola, Uber

Cab aggregators such as Ola and Uber will now be able to pocket only 20% of fares as commission. Drivers will receive the lion’s share — 80% —, per guidelines issued by the Road Transport Ministry on Friday. In the Motor Vehicle Aggregator Guidelines, 2020, the Ministry has also capped surge pricing at 1.5 times the base fare. We have reached out to Ola and Uber for comment and will update the story when they respond.

The government had last year amended the Motor Vehicles Act, by identifying aggregators like Ola and Uber as “digital intermediaries”, giving it the power to regulate them. These new guidelines are also largely in line with a set of draft guidelines the Ministry had issued in December 2019, albeit with a few exceptions. For instance, the draft had capped commissions at 10%.

Commissions capped at 20%, surge pricing limited to 1.5x

The guidelines place significant restrictions on the amount of money aggregators can take in the form of commissions, and from surge pricing. Repeated instances of financial inconsistencies with regard to the fare regulations, may also result in a suspension of their license:

Aggregator commissions capped at 20%: Drivers will receive at least 80% of the total fare of each ride, with the commission of cab aggregators such as Ola and Uber restricted to a maximum of 20%.
State governments, by means of a notification, can direct 2% over and above the fare towards the state exchequer for amenities and programmes related for vehicles operated by cab aggregators, “which have been helpful in reducing traffic congestion to a great extent and subsequently reducing pollution”. These may include state sponsored driver welfare programmes, road safety awareness workshops and activities, pollution control programmes, and allotment of parking spaces, among other things.

Surge pricing limited: Aggregators will be allowed to charge a maximum surge pricing of 1.5 times of the base fare, the guidelines mandate. The city taxi fare indexed by the Wholesale Price Index (WPI) for the current year will be considered as the base fare. Also, and aggregator will be permitted to charge a fare 50% lower than the base fare. In states where the city taxi fare has not been determined by the state government, an amount of ₹25-₹30 shall be the base fare, per the guidelines. It is worth noting that this fare regulation is not applicable to electric vehicles in an aggregator’s fleet.

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Penalty on ride cancellations: If a driver cancels a ride “without a valid reason” after initially accepting it, a penalty of 10% of the total fare, but not exceeding ₹100 will be imposed. These valid reasons will have to be specified by the aggregator itself. The penalty is the same as a driver when a rider cancels the ride. The driver will receive a minimum of 80% of this penalty borne by the rider, and the aggregator will pocket the remaining 20%.

No discrimination between different types of cabs: The aggregator can’t discriminate between cabs owned by them, and those that it doesn’t own. In addition, they will also have to integrate city cabs, like Mumbai’s black and yellow cabs, on their app. In case an aggregator receives more than three suspensions in a year, a showcause notice will be issued to them against cancellation of their license. Aggregators will be allowed an opportunity of hearing, but their license can be cancelled two days after the showcause notice is issued.

‘Ensure’ insurance for drivers, cap working hours

Insurance for drivers: Aggregators will have to ensure that each driver has a health insurance cover of at least ₹5 lakh for 2020-21, and that should be increased by 5% each year. The guidelines also mandate aggregators to ensure that drivers with a term insurance of at least ₹10 lakh for 2020-21, which will increase by 5% each year.

  • MediaNama’s take: It appears that the onus of “ensuring” compliance is on the aggregator. But a liberal reading of it suggests that the monetary burden of providing insurance doesn’t have to fall on them.

Enforce work hours for drivers: Aggregators will have to ensure that no driver is logged in to their platform for more than 12 hours in a day. In case a driver is logged in for more than 12 hours, a mandatory break of ten hours will have to be imposed on them by the aggregator. In case drivers are logged on to more than one platform — which is a common occurrence, with drivers using both Ola and Uber to get more rides in a day —, it will be the aggregator’s responsibility to develop a mechanism in their app to make sure that no driver drives for more than 12 hours in a day.

  • MediaNama’s take: Ola and Uber drivers have consistently complained of having to work long hours to make a decent wage. They have claimed that working fewer hours is not profitable for them.

Data localisation, opening up algorithms

App’s safety to be vetted by a recognised cybersecurity firm: Aggregators will have to make sure that any vulnerabilities in their app or website are revealed to the Indian Computer Emergency Response Team (CERT-In). “Safety” of the app will have to be certified by a “recognized” cybersecurity firm.

Ensure data localisation: Any data generated on an an aggregator’s app will have to be stored on a server in India, for a minimum of three months, and for a maximum of 24 months, from the date of generation of that data. Details of daily trips operated by each vehicle, details of passengers commuting in each vehicle, origin and destination of each journey, and the fare collected, should be accessible on the app three months.

“This data shall be made available to the State Government as per due process of law. Any data related to customers shall not be disclosed without the written consent of the customer.” — Motor Vehicle Aggregator Guidelines, 2020 [emphasis ours]

It isn’t clear what “data generated on the app” means in this context, and what types of data this will include, and whether it will also include people’s sensitive personal data.

Disclosing crucial information about operations: For bringing about “transparency in its operations”, an aggregator will have to reveal how its app’s algorithm works, the proportion of fees payable to the driver, incentives given to drivers, and charges received from drivers, among other things, on its website and app.

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Establishing control rooms, regular spot checks: Mandate for ensuring ride safety

The guidelines mandate that aggregators ensure women’s safety by introducing mechanisms to protect their rights, in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Aggregators will also have to set up a mechanism in their app so that the identity of a driver undertaking a trip is the same as the one enlisted with the aggregator.

The platforms will also have to carry out regular spot checks of its fleet. However, the guidelines do not specify the frequency of conducting these spot checks. An aggregator’s license can be suspended for a maximum of six months if it shows a “systemic failure” in ensuring the safety of riders and drivers. Other safety measures include:

  • A control room to monitor rides, a better complaints mechanism: A round the clock control room, with uninterrupted contact with drivers on the road will have to be set up by an aggregator. The control room should be in a position to monitor the movement of all the vehicles on the directions of the aggregator.
    • Aggregators should create a complaints mechanism so that riders can lodge their complains if they suspect that a driver is driving under the influence of alcohol or drugs. After receiving such a complaint, the aggregator will have to immediately off-board the driver, who shall remain suspended for the period of investigation by the aggregator.
  • Grievance redressal: Apart from the control room, a separate 24×7 call centre will also have to be set up by the aggregator to enable a rider or driver to raise issues about a ride while a ride is in progress, or after the completion of a ride for a period of three months. A driver’s direct contact number should be made available to a rider for a period of 24 hours from availing the ride.
    • The call centre will have to report riders’ concerns related to a particular ride or driver within 24 hours. However, in case the complaint is criminal in nature, then they can report it within 72 hours — in this case, the concerned driver will be off boarded till the complaint is resolved. For complaints against a driver dealing with violations of these guidelines, the driver will have to be off-boarded for two days. It isn’t clear where these complaints have to be reported.
  • Women passengers should be allowed to ride pool with only women riders: Female passengers seeking to avail ride pooling should be provided the option to pool only with other female passengers. In general, aggregators can provide pooling facilities to riders “whose details and KYC are available”, under a virtual contract through the app.
    • Only a few kilometres of detour should be allowed in the ride pooling service, however, state governments are free to relax the detour specifications in order to increase access.

Aggregation of non-transport vehicles by aggregators

In order to reduce traffic congestion, and traffic pollution, aggregators may be allowed to use non-transport vehicles in their fleet, as long as state governments do not prohibit it — “rationale for such prohibition shall be specified in writing and accessible on the transport portal of the State Government”.

The vehicles integrated under this will have to obtain an insurance of at least ₹5 lakh for the ride-sharers in the vehicle, other than the owner or driver. A maximum of four ride-sharing intra-city trips on a calendar day and a maximum of two ride-sharing inter-city trips per week will be permitted for each such vehicle.

 Onboarding and training drivers

The aggregator will have to arrange a driving test facility with a simulator to test the driving ability of drivers, and set up an Induction Training Programme. This program includes a compulsory five days of training, for a total of 30 hours, before a driver and a vehicle can be onboarded to an aggregator’s fleet. As part of the program, drivers will have to be educated on gender sensitisation and safety of female riders.

Onboarded drivers should have a minimum of two years of driving experience. In case a driver has less experience than that, the driver will have to take a driver training organised by the aggregator for a period of 15 days before onboarding. This will be in addition to the Induction Training Programme.

The rules also place significant conditions on a driver’s identity verification:

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“Complete police verification of the identity of the Driver and his antecedents with a written record of such verification prior to fifteen days of on boarding. For facilitation of the same, the police authorities shall be provided access to the Aggregator’s Application Programming Interface (API) by the Aggregator. Subsequent to such verification, the police authorities shall grant certificate of good moral character without any criminal record, to the Driver.” — Motor Vehicle Aggregator Guidelines, 2020

Before onboarding, a driver will have to go through a complete medical examination, including an eye check-up, by a hospital or medical institution prescribed by the aggregator. Costs for these medical check-ups will be borne by the aggregator. Once a year a refresher training program will also have to be conducted by the aggregator for drivers. A record of these training sessions will have to be documented and preserved for at least a year.

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