The central government has introduced revised Motor Vehicle Aggregator Guidelines, 2025, permitting cab aggregators to charge up to twice the base fare during peak operating hours. This significant policy shift, effective from July 1, aims to refine the regulatory framework for urban mobility services, impacting both passenger costs and driver earnings. The move seeks to balance market dynamics with user safety and driver welfare, influencing the future of sustainable urban transport.
The Ministry of Road Transport and Highways (MoRTH) has unveiled a refined regulatory framework for cab aggregators, marking a substantial recalibration of pricing mechanisms within the urban mobility sector. Under the newly issued Motor Vehicle Aggregator Guidelines, 2025, aggregators such as prominent platforms are now permitted to levy charges up to double the established base fare during periods of peak demand. This represents an increase from the previous ceiling of 1.5 times the base fare, simultaneously introducing a minimum charge of 50 per cent of the base fare during non-peak operating hours. These adjustments are poised to significantly influence consumer behaviour and the operational economics of ride-hailing services across Indian cities, with state governments advised to adopt these updated guidelines within a three-month window.
A key provision within the new guidelines addresses the contentious issue of ‘dead mileage’ – the distance covered by a driver before picking up a passenger. The revised framework stipulates that the base fare will now implicitly cover a minimum distance of three kilometres, intended to compensate drivers for this unremunerated travel. However, passengers are explicitly protected from being separately charged for dead mileage, unless the total journey distance falls below the three-kilometre threshold. This clarity aims to foster greater transparency in fare calculation, ensuring that the fare is strictly computed from the passenger’s origin to the designated drop-off point, thereby enhancing fairness for the end-user.
The guidelines also delve into the critical aspect of fare distribution, seeking to establish a more equitable revenue-sharing model between drivers and aggregators. For drivers operating their own vehicles, the revised provisions mandate that a minimum of 80 per cent of the total fare must be disbursed to them, with the remaining portion retained by the aggregator as apportioned fare. In scenarios where vehicles are owned by the aggregator, drivers are guaranteed no less than 60 per cent of the total fare. This measure is a significant step towards bolstering driver welfare, recognising their pivotal role in the urban transport ecosystem and addressing long-standing concerns regarding their earnings and working conditions.
Furthermore, the revised guidelines introduce standardised penalties for ride cancellations, aiming to foster greater accountability from both drivers and passengers. Should a driver cancel a confirmed ride without a valid, justifiable reason, a penalty equivalent to 10 per cent of the total fare, capped at a maximum of ₹100, will be applicable. An identical penalty structure applies to passengers who cancel confirmed rides without due justification. This standardisation seeks to reduce arbitrary cancellations, thereby improving the reliability of services and ensuring a more predictable experience for all stakeholders.
MoRTH has articulated that these refined guidelines represent an evolution of the 2020 rules, designed to provide a “light-touch” regulatory framework. The overarching objective is to strike a delicate balance between ensuring user safety and promoting driver welfare, while simultaneously fostering innovation within the aggregator market. The provisions also encompass terms for fare settlements, allowing for daily, weekly, or fortnightly disbursements, as mutually agreed upon between the aggregator and the driver. This flexibility in payment cycles aims to cater to the diverse financial needs of the driver community.
The implications of these new guidelines for urban mobility and the broader vision of sustainable cities are multifaceted. While increased peak-hour fares might incentivise a marginal shift towards public transportation or ride-sharing during congested periods, thereby potentially reducing single-occupancy vehicle trips and associated carbon emissions, the primary impact will be on affordability. Higher costs during peak hours could disproportionately affect lower-income commuters or those with limited access to alternative transport options, raising questions about equitable access to essential urban services. Conversely, improved driver earnings and fairer cancellation policies contribute to a more stable and sustainable gig economy, which is crucial for the livelihoods of thousands of individuals. The successful implementation of these guidelines will require vigilant oversight to ensure that market liberalisation does not compromise the principles of affordability and social equity, ultimately shaping a more balanced and efficient urban transport landscape.
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