App-based cab aggregators new business entities, govt to frame rules for them

14th Apr 2017
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The Lok Sabha has already passed the relevant amendment to the Motor Vehicles (Amendment) Bill, 2016 this week, which has been welcomed by the industry, as app-based cab aggregators will no longer be required to register as a taxi operator under obsolete laws.

Cab aggregators have received recognition as a separate business entity and will no longer be categorised as taxi operators. The central government will frame the guidelines for their operation.

In sync with change. Credit: Shutterstock

These much needed guidelines are part of a series of amendments tabled by Transport Minister Nitin Gadkari and passed in the Lok Sabha this week.

The amendments for the first time recognise app-based taxi aggregators as a separate business entity, and such operators will no longer be classified as taxi operators needing permits of different kinds to operate.

Though the Rajya Sabha is yet to pass the Motor Vehicles (Amendment) Bill, 2016, the move has been welcomed by app-based aggregators, who have of late been facing the ire of their driver partners on driving conditions and commercials as well as hostility from several state governments, which grounded them for not registering themselves in their respective states to enable their operation. A section of the drivers and cab owners are starting their own app.

“The changes are significant as they will, for the first time, acknowledge the fundamental reordering of mobility. The Bill defines taxi aggregators and states that the guidelines for their approval will be determined by the central government,” says Shweta Rajpal Kohli, Head, Public Policy for Uber.

This also means that such operators, who are hugely popular among urban users, have moved out of the grey area and become a business entity by themselves. After the law is passed—once the Rajya Sabha approves it, a Presidential assent follows—state governments will issue licences to taxi aggregators as per central government guidelines.

Currently, state governments determine guidelines for plying taxis, as transport is a concurrent subject and is overseen by states in the union. Under the concurrent list, if Parliament passes an amendment, all other laws passed by a state government related to this topic will override it.

The MV Act is a three-decade-old law that has outlived its utility on several fronts – a reason why these amendments were brought forward.

Gadkari said the time had come for the government to keep pace with technology and a young, aspirational India.

Kohli adds that this transformative piece of legislation marks the official recognition of the ridesharing industry in India. “Very often, technology and innovation outpace regulation and rule-making. It is heartening to see how the Indian government has managed to stay in sync with the times and aligned the laws to reflect the changed mobility environment in the country,” she says.

The recognition also proves that the government has taken into consideration that millions of jobs are created by the industry, as it provides employment for drivers, fleet managers, as well as technology providers across the country.

Earlier, states such as Karnataka and Maharashtra had come down heavily on aggregators and forced them to apply for permits locally, making their operation as an app-based service almost illegal. It has also become incumbent upon the app-based service providers to fill in safety gaps with technology such as GPS-tracking, in-app emergency buttons, vehicle details, telematics, and customer privacy during and after rides.

Wait and watch

A Karnataka transport officer told YourStory that it was too early to comment as the amendments had not become a law yet. “We have to wait and see if the Rajya Sabha accepts these recommendations. It may come before it in the monsoon session in July. But yes, we are aware of the draft being circulated and we welcome it, but our stand has been vindicated that every app-based aggregator needs to register with the state government too and follow our rules,” he said, seeking anonymity.

The guidelines issued in December last year and in circulation till the amendments were tabled in the Lok Sabha were quite significant. A number of aspects, including promoting shared assets over private cars, easing permit processes, encouraging online issuance of permits, enabling bike-sharing, and other significant changes, most of which were brought in as amendments after circulation with stakeholders, have been addressed.

This is also an attempt at standardisation, with little room for states to stifle progress.

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