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Karnataka Government News: Karnataka Government Talks to Aggregators, Favors 10% Convenience Fee Cap and Rejects Flexible Tariffs

The Karnataka government plans to ask the High Court to ratify the existing ad hoc convenience fee agreement put in place two weeks ago to break the stalemate resulting from friction between the Department of Transport and utility companies. application-based transportation.

The Karnataka High Court had on October 14 capped the convenience fee at 10% of rates, excluding GST, as an interim arrangement. Considering the positive feedback the government has received from auto rickshaw users, the government is planning to seek ratification of the same from the High Court.

On Saturday morning, Karnataka Transport Department Secretary NV Prasad held a meeting with leaders of app-based transport services including Uber and Ola in Bengaluru. The two sides, however, failed to reach a consensus as aggregators demanded a 25% convenience fee, including GST, on the total car fare.

Department of Transport officials, however, found it too steep and favored continuing with the existing arrangement, sources briefed on the meeting told ET.

Leaders representing aggregators have also called for a flexible tariff – in other words, an increase in prices – but government officials have not backed the idea, the sources added.

The department would now write up the minutes of the meeting and submit them to the High Court, asking it to decide the contentious issue. But before that, he could hold another round of talks with aggregators on Monday, sources said.

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Ola and Uber did not respond to ET’s request for comment until press time Saturday.

App-based aggregators and the transportation department were at odds after the department asked Uber and Ola not to offer auto rickshaw rides on their platforms, insisting they had been authorized to offer four-wheeled taxi services only. The order was prompted by media reports and consumer complaints that ride-sharing apps were charging minimum fares of up to Rs 100, while the state had capped the base fare at Rs 30.

The aggregators have gone to the High Court to challenge the October 6 order. On October 14, Judge MG Shukure Kamal issued an interim instruction capping the convenience fee at 10%. Aggregators hailed the temporary measure as it promised to pave the way for car journeys to resume through their platforms.

The court’s interim order came after the claimants, Uber and Ola, submitted to the court that the aggregator guidelines issued by the Department 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. Admittedly, the DOT has always maintained that the licenses issued to applicants under Karnataka’s 2016 On-demand Transportation Technology Aggregators Rules limited their scope of business to taxi rides only.

While welcoming the court’s interim verdict, Uber had objected to any potential caps on commission or convenience fees when the government introduces its new pricing policy.

Likely sensing that the government might want to make the ad hoc arrangement permanent, an Uber executive had told ET that the 10% cap, if made permanent, would threaten the viability of their operations.

Ride-sharing companies Ola, Uber and Rapido had charged convenience fees of up to Rs 47 after tax on top of a base fare of Rs 60, leading customers to pay over Rs 100 even for short journeys one kilometer. The companies reduced the base to Rs 30 shortly after receiving the government 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 at the heart of the discord between the government and the aggregators.

The court also ordered the Department of Transportation not to take any enforcement action against app-based companies until the claims are resolved. He asked app-based companies to apply for renewal or new licenses under the regulations and asked the transportation department to review it according to law.

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