Developing Optimal Regulatory Framework for Taxi Aggregators in India

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Background
Central Government recently ratified Motor Vehicle Amendment (MVA) Bill 2019 which now recognizes Aggregators as a separate entity, defining them as digital intermediaries or marketplaces which can be used by passengers to connect with a driver for transportation. Within the Act framework, the Centre now plans to formulate a binding common umbrella guideline for regulating aggregators on aspects such as permissible vehicles, dynamic pricing, safety, ownership and liabilities etc.

Two cardinal issues, pricing mechanism and safety standards with respect to taxi aggregator regulations have received mixed response from different stakeholders and have remained matters of wider debate in policy circles. Riders have been concerned about imposition of dynamic pricing whereas aggregators see it as an effective instrument to manage demand and supply apart from providing other benefits. Though central government has been deliberating to put a cap on surge pricing, three times to the basic fare, realizing its adverse impact, its premier think-tank NITI Aayog has argued for refraining from any such cap or floor price.

In context of safety, the MVA Act 2019 sets provision for penalizing a driver in case of using a handheld communication device while driving. Given that these services are heavily dependent on such devices, applicability of such provision (interpretation of the term “use”) remains a question. Moreover, given that existing taxi aggregators have set benchmarks for safety standards in the industry, it must be ensured that additional safety related obligations do not act as deterrent for entry of new drivers and growth of overall taxi aggregator network. Provided the ambiguity and divergence of opinions and understanding on these issues, the project is envisaged to take up research and advocacy based on secondary literature and stakeholder interactions, to inform policymakers of optimal regulatory solutions.

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