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Image credit: Manish Rajput/SOPA Images/LightRocket via Getty Images

India's new ride hailing rules cap driver hours and limit surge pricing

Uber, Ola and others may also have to guarantee higher revenue.
Jon Fingas, @jonfingas
November 29, 2020
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DELHI, INDIA - 2020/05/19: Cab drivers (ola,Uber) chatting on the road side while wearing face masks as a precaution, during the eased lockdown restrictions.
As a preventive measure against the spread of the COVID-19, restrictions were imposed, the govt has eased some of the restrictions after several days of lockdown. (Photo by Manish Rajput/SOPA Images/LightRocket via Getty Images)
Manish Rajput/SOPA Images/LightRocket via Getty Images

India is bringing app-based ride hailing services under dedicated regulation for the first time, and it might just set an example for other countries. TechCrunch reports the country has instituted guidelines that set expectations for both drivers and customers. Drivers can’t work more than 12 hours, for example, and must get to keep at least 80 percent of their fare. Unofficial estimates suggest drivers tend to get 74 percent of the fare, so this could lead to a practical pay raise.

The companies will also have to insure drivers, and can’t charge cancellation fees greater than 10 percent of the fare or 100 rupees (about $1.35). Women passengers will also have the option to share cars solely with other women.

Some of the new rules could favor ride hailing services in some cases. They can’t charge more than 1.5 times the base fare with surge pricing, but they can also charge 50 percent to spur more trips. They can also offer carpooling using private cars, although drivers are limited to four intra-city rides per day and two inter-city rides per week.

This might produce a mixed result for drivers. While this could boost trust in the likes of Uber and Ola, Redseer partner Ujjwal Chaudhry warned it could actually hurt take-home income by limiting surge pricing and fees. It might also raise prices and extend wait times, Chaudhry said.

Whatever the outcome, there’s a good chance others will be looking closely. Companies like Uber and Lyft are coming under closer scrutiny for their practices, with California demanding that they treat drivers as employees instead of contractors with fewer protections. Whether they succeed or fail, India’s rules may set the tone for governments that either haven’t set their own guidelines or are looking at reforms.

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