The ubiquitous Ola and Uber taxis darting across city roads all over the country have been operating in virtually a regulation-free zone so far.

For nearly a decade since aggregators like Ola and Uber entered the Indian market, the law which regulates all road transport didn’t even acknowledge their existence, not having seen a single amendment since 1988, the first time the Motor Vehicles Act was implemented. That changes now, with the Motor Vehicles (Amendments) Act 2019, which, for the first time, recognises transport aggregators as ‘digital intermediaries’ or market places for passengers to connect with drivers.

The new rules state that like an agent or canvasser, app-based ride-hailing firms will have to obtain licenses to operate from state authorities under the guidelines laid down by the central government. The government is currently in the process of drafting these guidelines and is expected to release them in the next three-six months.

What to expect in these guidelines?

The guidelines are likely to provide to a regulatory framework which will be notified to state governments, who may also be given additional powers to regulate these operators, owing to the differences in the topography of each state. So far, the liabilities resulting from violations attached with the platform have been unclear.

The act has provision for a range of penalties in case drivers are found to be flouting these rules. For aggregators found violating the licensing norms, the penalties will range from Rs 25,000 to Rs 1 lakh. The ‘guidelines’ are expected to put a greater onus on cab aggregators for passenger experience and safety, considering them as gateways, and not mere ‘tech platforms’.

Advocacy groups participating in government consultations on the drafting of the new regulations have been demanding that these companies be treated as fleet operators, or transport companies, and therefore, be subject to stricter standards.

“Our expectation really has been to treat the aggregators not merely as platforms but as gateways for lakhs of drivers to come on our streets, and therefore apply policies that would apply to fleet operators. In effect as intermediaries, the aggregators are acting as fleet operators, so things ranging from minimum safety standards for vehicles to minimum training standards for drivers, to give a stress before they come on the platform, for there to be fatigue management, creating a registry of the crashes where their drivers are involved and also declaring this data on the website and to the government in addition to ensuring there are basic training to drivers to prevent them from taking place in the first place should be made mandatory for them,” Piyush Tewari, founder and CEO of SaveLife Foundation, told CNBC-TV18.

Where do aggregators stand?

Aggregator platforms, predictably, aren’t too happy with the proposed guidelines and have been lobbying to be recognised as ‘pan-India intermediaries’ to avoid complying with multiple regulations in different states. In fact, the usage of ‘guidelines’ instead of ‘regulations’ in the act is a result of intense lobbying by these platforms.

However, global precedent works against them when they cite themselves as mere tech companies, and shedding legal accountability for violations by drivers – The European Court of Justice in December 2017 ruled that Uber would be regulated as a "transportation company", subject to the same rules as taxi services instead of the lighter regulatory framework governing the digital space.

Certain American states, including California, have passed legislation which recognises drivers working with platforms such as Uber and Lyft as employees and not ‘independent contractors’, giving drivers employee benefits and holding the companies to greater responsibilities.

Drivers joining these platforms are also subject to stricter entry standards, like a minimum driving experience of three years, which isn’t followed in India.

“Currently, if we look at any of the aggregator websites in India, they merely talk about some basic licensing requirement and a police verification of anyone as minimum requirement to get attached to the network, regardless of the condition of the vehicle, regardless of safety standards and prior violations: None of this looked into by Indian arm of these companies. The same companies follow a lot more stringent standards when they, for example, operate in the US. The companies should bring more parity to their operations in India and not follow double standards when it comes to road safety of passengers,” Tewari told CNBC-TV18.

“Whose responsibility is it to ensure there is minimum standardization in these vehicles. There needs to be minimum safety equipment to be available in all vehicles and aggregators very well have the ability to do that. They have the tech to detect wrong side driving, overspending etc, and it’s easy for them to fix those issues. Our expectation is for the government to hold drivers accountable”, he added.

Aggregators are also pushing back on a proposal to cap surge pricing during peak hours, adverse weather or emergency situations. A LocalCircles survey of over 22,000 people reveals that 39 percent believe surge pricing is their biggest issue with app-based taxis, followed by driver cancellations. While 49 percent of the survey’s respondents said that surge pricing should be banned completely, even if it leads to poor availability of cabs, 45 percent took the view that surge fares should be capped at 25 percent over regular fares.

Presently, the Madhya Pradesh government is working to implement a set of regulations for app-based taxi services operating in the state, under which any app-based taxi which refuses or cancels a ride will have to pay a penalty of Rs 1,000 per refusal.

The Karnataka government, separately, issued orders to suspend operations of Ola and Uber when they were found to be in violation of the state’s guidelines for on-demand taxi operators.

Which way India will take when it finalises its own framework will become in the months to follow, as the government works in consultation with these platforms to frame the new rules.

First Published:Sept 13, 2019 5:19 PM IST