Back in the driver's seat: two days on, Karnataka lifts the six-month ban on Ola

Commuters and startups both heaved a sigh of relief as Karnataka's Minister for Social Welfare, Priyank Kharge, took to Twitter to announce that the ban imposed on ride-hailing company Ola, had been lifted. In his tweet, Mr Kharge said that Ola would run its business as usual.

On Friday, March 22, the Regional Transport Department had issued a notice to ANI Technologies, Ola's parent company, asking it to suspend its app-based cab services in the city. 

The Minister also pointed out in his tweet the the need for government policies to policies to catch up with new technologies and keep up with innovation.

Late on Friday night, the Minister had responded to a tweet by YourStory Founder and CEO Shradha Sharma, where she highlighted the likely impact of the Karnataka transport department’s decision to suspend Ola’s licence for six months. She wrote, “Ban on Olacabs: shouldn’t it be revoked? 75,000 cab drivers and their families will suffer and so will millions of consumers.”

In response, the Minister tweeted,

“Have spoken to Sri. CM of Karnataka (H.D. Kumaraswamy) and Sri Dr Parameshwara (Deputy CM) and will have it resolved by tomorrow (Saturday). Our government will maintain a healthy balance between investors, industries, consumers, and welfare within the ambit of law.”

Mr Kharge had served as Minister for IT, BT, Science and Technology in the previous state government. Giving the keynote address at YourStory's flagship tech summit, TechSparks 2018, the Minister had stated, "Innovation should be bred by the government." He had also pointed out the need for governments and startups to work together to ensure innovation reached the masses and for policies to keep up with technological developments.

YourStory spoke to several people in the startup ecosystem, including entrepreneurs and investors, all of whom emphasised the need for policies to keep up with technology-driven innovations, or at the very least, for authorities to understand the solution instead of pronouncing them illegal.

The background

The two-page letter from the Transport Department stated that the ride-hailing app had been illegally operating bike-taxi services through alleged 'fake licences'. It also said that the Transport Department would be suspending the company's license for the next six months: in effect, this banned all its services. The Department's notice also stated that the app-based services went against the Karnataka Motor Vehicles Act, 1988.

Ola had immediately issued a statement saying,

"This notification is unfortunate, and we look forward to an opportunity to address these concerns directly with state officials to find a solution for our driver-partners and millions of Ola users in Karnataka."

This was not the first time that ride-hailing companies have had trouble with the authorities. In 2016, Ola and Uber cabs were impounded because they were deemed illegal. The following year too, vehicles were impounded after shared cabs were deemed illegal under the provisions of the same Act. Subsequently, these operators had complied with the requirements put forward by the Transport Department and had the vehicles regularlised.

After Friday's ban, several startups and commuters had taken to social media to point out that there was a need for services like Ola in a city like Bengaluru.

The Minister's tweet this morning received several responses immediately, including one by Avnish Bajaj, Managing Partner at Matrix Partners India, an investor in Ola.

Ola has big plans

Earlier this week, Ola and Hyundai Motor Group announced a strategic partnership, where Hyundai and Kia Motor Corporation, both part of the same group, will make a combined investment of $300 million in the ride-sharing platform. 

Last month, it raised Rs 650 crore in funding from Sachin Bansal, Co-founder of Flipkart. In January, Sachin had invested Rs 150 crore in the company, and committed additional funding. The ride-hailing aggregator has already raised $74 million led by Steadview Capital as part of its larger $2 billion round.

Late last month, auto major Mahindra & Mahindra entered the ride-sharing business with its electric car hailing service Glyd. Media reports said the company flagged off its first batch of 10 e-Veritos in Mumbai recently. 

Also read: Exclusive: Sachin Bansal and Bhavish Aggarwal talk about the biggest domestic investment in a desi internet venture

This story has been updated for additional background details.