Karnataka govt declares ride-hailing service Ola, Uber, & Rapido `illegal`

• ByStartupStory     |    October 8, 2022

The state government of Karnataka has again deemed the vehicle services of app-based taxi and bike aggregators Ola, Uber, and Rapido “illegal” and ordered them to cease operations within three days.

A notice by the Karnataka State Transport Department said, “The auto services should be discontinued and not charge passengers more than the fare prescribed by the government.” The department has given the aggregators three days to file the compliance reports. 

Several commuters filed complaints with the transportation department over Ola and Uber charging a minimum of Rs 100 for trips under two kilometers (km). The minimum auto rate in Bengaluru is Rs 30 for the first 2 kilometers and Rs 15 for each additional kilometer.

Rapido asserts that its services and fares comply with regulatory regulations. Commenting on the development, a Rapido spokesperson said, “In light of the notice issued to auto-rickshaw service aggregators by the Commissioner, Road Transport and Safety, Transport Department of Karnataka, Rapido would like to clarify that none of its operations in the city of Bengaluru are illegal. We have received a notice from the Road Transport Authority, and we will be responding to it within the stipulated time. The allegations being made regarding extra money charged by Rapido on auto taxi fares are completely false. All our fares are determined in accordance with the fares decided upon by the state government, and Rapido is not charging any extra money over those fares.”

According to an Ola insider, the ride-hailing unicorn’s operations would continue as usual. However, the corporation has officially declined to comment on the matter at hand.

According to sources, Uber and Ola have decreased their minimum vehicle fare for the first 2 kilometers to Rs 30 as a result of the move.

According to verified industry sources, the base price of an online-booked vehicle ride in Bengaluru includes a number of optional extras. They are the government-mandated base rate and per-kilometer fare, as well as the aggregator’s booking and convenience fee.

In response to rising gasoline costs, industry insiders say that app-based mobility providers like Uber and Lyft have raised their basic fares. In addition, booking with aggregators includes a “pick-up” component, which is not present when hailing an auto-rickshaw on the street. For drivers, the pick-up cost increased as fuel price rose, making it unviable for them to do pick-ups in the absence of any rate rise, according to an insider.

The Karnataka transportation authority, however, has labeled the vehicle services provided by these taxi aggregators as “illegal” under the On-Demand Transportation Technology Act, 2016.

The Act was used to provide licenses to these businesses, and the Act’s regulations do not apply to auto-rickshaws, therefore this is how they got the licenses, so say the sources. Those that compile data are being asked to provide an update.

“As per the provisions in the On-Demand Transportation Technology Act, 2016, aggregators are given licenses to provide taxi services only — taxi means a motor cab having a seating capacity not exceeding six passengers, excluding the driver, with public service permit on contract,” said the transport commissioner, T H M Kumar, in a notice issued on Thursday.

The Competition Commission of India (CCI) issued a piece of advice to taxi aggregators (CAs) like Ola and Uber on September 9, advising the companies to take self-regulatory steps to deal with problems including spike pricing and a lack of transparency. The document requested that the CAs and drivers work together to create open and comprehensible standards for dividing up the extra cash generated by surge pricing. This followed several reports of these platforms’ alleged unethical business practices from customers and drivers.

Follow Startup Story