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bengaluru auto fare: in Bangalore, apps must cap charges at 10% of auto fare

The Karnataka High Court, in an interim agreement on Friday, capped convenience fees chargeable by app-based aggregators for rickshaw services in Bangalore at 10% of the tariff.

This excludes the Goods and Services Tax (GST) to be collected on the total rate, as before.

Judge MG Shukure Kamal issued the interim instruction after ride-sharing companies Uber and Ola failed to agree with the state transportation department on fares. A meeting was held on Thursday out of respect for the court’s suggestion, but both sides maintained their respective positions, sources told ET.

“We welcome today’s court order,” Uber said in a statement, adding that management lends legitimacy to the service. “It recognizes that car drivers have the right to operate using aggregation platforms. He also acknowledges that platforms like Uber can charge booking fees, allowing them to cover their costs and continue to provide services.

Ola declined to comment on the new High Court directive.

On October 6, the Karnataka Department of Transport issued a notice to all ride-sharing apps, asking them to stop accepting rickshaw rides as they were allowed to offer four-wheeled taxi services only.

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The authority had also said ride-sharing apps charged minimum fares of up to Rs 100, while the state had capped the base fare at Rs 30.

Disagreement over scope of operations

The interim order came after the plaintiffs, Uber and Ola, submitted to the court that the aggregator guidelines issued by the Ministry of Road Transport in November 2020 also covered auto rickshaws.

The guidelines were issued under an amendment made the previous year to the Motor Vehicle Act 1988.

The Department of Transport, however, has always maintained that the licenses issued to applicants under Karnataka’s 2016 On-demand Transport Technology Aggregators Rules limit the scope of their operation to taxis only.

On Friday, the petitioners also prayed to raise the convenience fee cap to 20% of fares.

Threat to viability

While welcoming the court’s interim verdict, Uber objected to any potential caps on commission or convenience fees when the government comes up with its new pricing policy. The 10% cap on commissions, if made permanent, will be a blow to aggregators as it will significantly reduce their revenue, company executives told ET.

Uber, in its statement, argued that the commission caps will “threaten the viability” of the business, “impact the tens of thousands of car drivers who depend on it for their livelihoods and cause this nascent category to shrink. “.

“We will continue to engage with the government to find ways to regulate the sector in a way that allows riders, drivers and platforms to benefit from the technology that has truly transformed urban mobility,” he said.

Attorney General Prabhuling Navadgi, representing the government, asked the court for time to set these rates in line with central guidelines.

More talks

The interim order should break the impasse for the time being and make it easier for app-based car rides to operate smoothly at regulated fares and charges.

The Karnataka High Court has asked the state government to hold another round of talks with the ride-sharing companies to try to reach an agreement.

Lately, ride-sharing companies Ola, Uber and Rapido charged convenience fees of up to Rs 47, after tax, in addition to a base fare of Rs 60, leading customers to pay over Rs 100 even for a one kilometer journey. The companies reduced the base to Rs 30 shortly after receiving the notice, then also reduced the convenience fee, as ET reported on October 12.

The convenience fee, which accrues to aggregators, remained largely fixed and was not based on distance travelled. This fee has been a bone of contention for the government and aggregators.

On Friday, the judge also ordered the Department of Transportation not to take any enforcement action against app-based companies until the petitions have been eliminated. The court told the app-based companies to apply for renewal or new licenses, as the case may be, under the regulations and told the ministry to review them according to law.