Indian govt allows Ola, Uber, and Rapido to charge 2x of base fare during peak hours

In a landmark policy shift poised to reshape the future of urban transportation, the Ministry of Road Transport and Highways on Tuesday issued the Motor Vehicle Aggregator Guidelines 2025, providing formal regulatory clarity for ride-hailing platforms such as Uber, Ola, and Rapido. 

The sweeping guidelines legalize dynamic pricing, support the aggregation of private motorcycles for passenger transport, and mandate new standards for driver payouts, vehicle compliance, and consumer protection.

Under the revised framework, surge pricing has been officially legalised, with platforms permitted to charge up to twice the base fare during peak hours. 

Conversely, they may offer up to 50% discounts during off-peak hours. While base fares will remain under the purview of state governments, aggregators now have formal sanction to modulate prices in real-time, lending predictability to a practice long considered a legal gray area.

“The new guidelines offer a forward-looking foundation for digital mobility in India,” an Uber spokesperson said, calling the release a “balanced and consultative” step by the central government. Ride-hailing firms had previously operated under a patchwork of state-level regulations that varied widely and sometimes clashed with the realities of app-based mobility.

Private motorcycles cleared for public transport

Perhaps the most consequential provision is Clause 23, which for the first time authorizes state governments to permit the aggregation of non-transport motorcycles, effectively legalizing bike taxis across the country. These vehicles, typically private two-wheelers, may now be used for shared mobility services under short-term state-issued authorizations, ranging from daily to fortnightly validity.

The move comes as a welcome relief to operators like Rapido and Ola, whose bike-taxi services were recently suspended in Karnataka following a high court order. Rapido, in a statement, hailed the update as “a milestone in India’s journey toward a Viksit Bharat.”

“By recognising non-transport motorcycles as a means of shared mobility, the Government has opened the door to more affordable transportation options for millions, especially in underserved and hyperlocal areas. The move will also help address pressing challenges such as traffic congestion and vehicular pollution, while expanding the reach of last-mile connectivity and hyperlocal delivery services,” Rapido added.

Drivers’ share and cancellation fees standardised

The guidelines also formalize revenue-sharing norms. Drivers using their own vehicles must receive at least 80% of the fare, with aggregators allowed to retain a 20% commission. In cases where the aggregator owns the vehicle, the driver’s minimum share is set at 60%. This marks the first time that minimum payout guarantees for gig drivers have been defined at the national level.

To curb high cancellation rates, both passengers and drivers will now face penalties of 10% of the fare, capped at Rs 100, for cancellations without a valid reason. Aggregators must clearly define and disclose valid cancellation reasons on their platforms.

In a bid to improve safety and operational oversight, aggregators are now required to onboard only police-verified drivers and provide at least 40 hours of induction training. All vehicles must be fitted with AIS-140 compliant GPS devices and panic buttons. Additionally, ride-hailing apps must be available in regional languages and comply with India’s new data protection framework.

The guidelines also compel aggregators to progressively convert their fleets to electric or alternative fuel vehicles in accordance with targets set by state governments or environmental regulatory bodies. Separate mandates will apply to ensure a proportion of vehicles are accessible to persons with disabilities.

While the central guidelines are binding, state governments have been given a three-month window to adapt and implement them. They retain the flexibility to tailor specific aspects such as fare ceilings, license fees for bike-taxi authorizations, and EV targets to suit local conditions.

“The state government may allow aggregation of non-transport motorcycles for journeys by passengers as shared mobility through aggregators, resulting in reduced traffic congestion and vehicular pollution, along with providing,inter alia, affordable passenger mobility, hyperlocal delivery, and creating livelihood opportunities”.

States have the discretion to levy fees for granting authorizations on a daily, weekly, or fortnightly basis. Although not mandatory, the guidelines give states the legal authority under Section 67(3) of the Motor Vehicles Act to enable or restrict the operation of private motorcycles as bike taxis.