India makes up its mind about Uber, Ola. Surge pricing is legal now

The famous Red Fort in New Delhi. Photo credit: johnnychaos / 123RF.

India finally charted out a fresh set of rules for the transport industry, which means Ola and Uber now have a handbook to refer to when they are in doubt.

That should be a great relief to the app-based taxi startups, who have gone on and off the roads in India due to a lack of clear regulations.

But most importantly for the companies, the new regulations have allowed surge pricing within reason.

“Innovation is always ahead of regulation… Uber is disrupting the world and when disruptions like these take place India must have the capability to understand and modify and change regulations to keep with the innovation,” the CEO of the National Institution for Transforming India said last week.

For the latest ruling, a committee of the Ministry of Road, Transport, and Highways reviewed issues relating to taxi permits and recommended that the aggregators should be allowed surge or “dynamic” pricing within a certain range to match supply and demand.

“Maximum tariff may be allowed up to four times that of minimum tariff from 12 midnight to 5 am in morning,” the committee ruled, adding that a “very high degree of variation in pricing should not be permitted as it may lead to exploitation of consumers in the time of crisis.”

See: Ola and Uber roll back surge after a threat by Delhi’s Chief Minister of ‘strict action’

The committee also made allocations for bike sharing, urging states to consider allowing converting private bikes to taxis.

“The State Transport Department may allow two-wheeler taxi permit on the lines similar to those for city taxi. This will offer an economical and convenient last mile connectivity solution to the citizens. It is highly recommended that existing private bikes may be allowed for such transportation in order to facilitate utilisation of idle assets,” the panel said.

Ola and Uber had both launched bike taxis in India, but had to take them off the streets due to government rulings. Uber eventually brought them back in some cities, but Ola didn’t.

See: Ola and Uber roll back surge after a threat by Delhi’s Chief Minister of ‘strict action’

“The revised guidelines from the Ministry of Road Transport & Highways are progressive and forward-looking for the ride sharing space. This is definitely a significant move in the interest of India’s unique and growing mobility needs, which need to be addressed holistically,” Pranay Jivrajka, COO of Ola, said in a statement.

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