India has finally got around to setting a regulatory framework for companies like Uber offering apps to hail taxis, recognizing them as intermediaries rather than as taxi operators.
But the rules will still place a lot of controls on the app services to ensure that the taxis and drivers meet a host of service and safety standards. Regulations requiring that drivers of app-based services have approved bank accounts would also ensure that they come under the country's tax net, which they have largely eluded.
The rules, posted to the website of the federal Ministry of Road Transport and Highways, come in the wake of a boom in ride-hailing services in the country, driven largely by large local companies like ANI Technologies, which operates the Ola service, and the entrance of multinational companies like Uber.
The app companies have attracted their share of controversy, particularly after a passenger in Delhi alleged in December that she was raped by an Uber driver. Well-funded Ola is also being investigated by the Competition Commission of India for its alleged 'predatory pricing' to ease out a smaller competitor.
The new rules are more or less in line with regulations set by the Delhi Transport Corporation when it asked ride-hailing companies to sign up under its revised Radio Taxi Scheme.
The ride-hailing companies, called on-demand transportation technology aggregators, will continue to require licenses and their drivers will require commercial driver licenses and also police verification.
Besides running a round-the-clock call center, the aggregator has to ensure that all vehicles used have devices capable of tracking their location, for which the government will specify the standards at a later date, and also have emergency safety buttons. The apps will also have to provide riders features to share their location with at least two people close to them and the ability to contact the police in an emergency.
The rules also set working conditions for drivers, including requiring them to be allowed to work for multiple ride-hailing platforms. The ride-hailing companies cannot, for example, employ drivers or set minimum working hours for them.
Ola welcomed the advisory from the ministry and described it as a major step towards positively impacting the ecosystem that technology platforms like it have created. Uber said the guidelines were a significant step in the right direction as they "rightfully" distinguish between taxi operators and technology platforms. "We hope this new regulatory framework paves the way for similar progress in markets around the world," it added.
Ola on Tuesday launched its ride-sharing service, on the lines of UberPool, with the difference that it promises not to force users to ride with strangers but people of their "own social groups."