(Image source from: REUTERS)

The government has permitted ride-hailing companies like Ola and Uber to set fares up to double the base rate during peak times, a change from the previous cap of 1.5 times, while allowing a minimum charge of 50% during off-peak hours. In a newly released set of Motor Vehicle Aggregator Guidelines (MVAG) 2025, the Ministry of Road Transport and Highways stated that a cancellation by the driver, done without a valid explanation, will incur a penalty of 10% of the fare, capped at Rs 100. Passengers will face the same penalty for cancelling without a justified reason. The states have been encouraged to implement the updated guidelines within three months of their announcement, with the option to introduce additional regulations beyond those outlined in the new rules.

Concerning fare regulation, the ministry specified that the fare determined by the state government for each class or category of motor vehicles will serve as the base fare applicable to passengers utilizing aggregator services, as noted in sub-clause 17.1 of the guidelines. It further explained that the established base fare would cover a minimum distance of three kilometers to account for dead mileage, which includes both the distance traveled without passengers and the distance required to pick up passengers. Additionally, the government indicated that aggregators could charge up to 50% less than the base fare and implement dynamic pricing, with a maximum of twice the base rate mentioned above. Passengers will not be charged for dead mileage unless the distance for the ride is shorter than three kilometers. The guidelines specify that the fare should only account for the journey from the starting point to the destination where the passenger is dropped off. Lastly, the government mandates that aggregators must provide a minimum insurance coverage of Rs 5 lakh for passengers.