India has decided to take action to regulate VTC services, TechCrunch reports. These regulations will particularly affect Ola and Uber, the two companies that dominate the market in the country.
The measures adopted on Friday, November 27th, oblige VTC companies in particular not to exceed 20% of the commission charged on their prices. The increase in these tariffs during peak hours will also be limited: companies cannot charge more than 1.5 times their base tariff during peak hours. In addition, the new legislation requires companies to pay drivers 80% of every trip, while that rate is currently 74%. Nor can they work more than 12 hours a day and companies must now offer them social protection.
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New Delhi also noted that cancellation fees cannot exceed 10% of the total cost of the ride. Women can only travel with other women if they choose to carpool, and drivers can offer carpooling with their personal car. In this case, however, they are limited to four inner-city journeys per day and two intercity journeys per week.
Mixed consequences in the midst of a crisis
According to Ujjwal Chaudhry, advisor to Redseer, this new regulation will have mixed results, “although it will have a positive effect on the formalization of the sector and increased consumer confidence in aggregators thanks to the improvement in the rules of safety However, the impact of these guidelines on the growth of the ecosystem will be negative, as limiting the rise in price and license fees on platforms will ultimately result in lower revenues. […] and will also lead to increased prices and waiting times for the 60 to 80 million consumers who use it for their mobility and commuting needs. “As a reminder, Uber and Ola were badly affected by the Covid-19 pandemic and had to lay off employees in India.
The regulatory measures chosen by the state could be emulated in the rest of the world as Uber has just been required by the state of California to retrain its drivers.