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rapido: Ola, Uber and Rapido should not stop car services in Bangalore despite state missive

Ride-sharing companies Uber, Ola and Rapid are likely to respond within three days to notices issued by the Karnataka government ordering them to stop ‘illegal’ rickshaw services in Bangalore, several city executives have said. company, while denying accusations of price gouging. in one of the country’s largest markets for automatic calling services.

Aggregation platforms are unlikely to go out of business, they said.

The Karnataka state transport authority sent notices to the three companies on Thursday, saying state laws allow tech platforms to bundle only four-wheeled cars, a senior official said. He had asked them to stop the automatic call services within three working days.

In addition, the government had also demanded an explanation of reports that customers had been charged rates above the minimum rates stipulated by the state.

“It is not legal to consolidate cars, only cars can be consolidated, so we sent the notice to them,” Department of Transportation additional commissioner Hemanth Kumar told ET L.

A representative for automatic calling app Rapido told ET that the company “has no intention of fighting the law in any way.”

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“We will respond to the government within the next three days and work in accordance with what the transport authorities tell us,” the person said.

The Karnataka Department of Transport stipulates that Rs 30 is the minimum fare chargeable by automobiles in Bengaluru. However, the basic rates charged by an auto-calling app can total up to Rs 100. This includes convenience charges of up to Rs 45 and Goods and Services Tax (GST) of 5%” which take the final charge close to Rs 100 as the base fare for journeys of up to four kilometres,” a company executive said.

A Rapido spokesperson claimed that “all of our fares are determined in accordance with the fares set by the state government, and the company does not charge any extra over those fares,” the person said.

Uber and Ola declined to comment on ET’s questions.


Rising convenience fees

Earlier, in its Oct. 6 edition, The Times of India reported that car aggregators charged about Rs.100 for each ride while the minimum fare in Bengaluru was only Rs.30.

Previously, ride sharing companies charged a convenience fee of Rs 10-15. But it has increased in recent years as these companies have focused on improving profitability and unit economics, executives said.

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While Uber is a public company and there is a global mandate to achieve profitability, Ola is struggling to raise new capital amid a general slowdown in late-stage funding.

“Even when you buy a movie ticket, the platforms charge you a convenience fee because you can buy tickets at your convenience from home, the same way cars come to your doorstep, that’s the legal thought. behind it,” said an executive of a ridesharing platform.

Tanveer Pasha, president of the Ola-Uber Drivers and Owners Association and Karnataka State Automobile and Taxi Federation, welcomed the move.

“The autorickshaws have their own meter, their own fares and those fares come under the ARDO and instructions through the Bangalore City District Magistrate,” he said.


Clashes with governments


This isn’t the first time ride-sharing companies have been at odds with state governments.

In 2020, the Ministry of Road Transport and Highways released a draft policy, which serves as a model for each state to prepare its own state-level policy.

Delhi was the first to prepare a draft policy based on the Centre’s guidelines. The state government changed the policy to suit their needs and added rules regarding electrification. Successful implementation of the policy could set a precedent for other states to develop similar guidelines.

Ashish Kundra, Principal Secretary, Department of Transport, GNCT Delhi, told ET that Delhi will not seek to restrict the services of ride-sharing companies for the time being as the aggregation policy is likely to bring the required regulation.

Rapido had run into issues with its cycle taxi service with the Karnataka government in 2019 as motorcycles were not recognized as a vehicle to transport passengers. Later, the government came up with a bicycle taxi policy that only allows the use of e-bikes.

In Maharashtra, ride sharing companies have been instructed by the Bombay High Court to strictly follow the criteria set out in the Motor Vehicle Aggregators Guidelines, 2020.

The auto-call service also became important for ride-sharing apps amid the pandemic for its open form factor at a time when public transport was considered prone to the spread of Covid-19 and cars had to switch off. The air conditioning.

Ola founder Bhavish Aggarwal – whose company counts Bengaluru as its biggest auto-calling market – previously called the company’s ride-sharing business a “very profitable” business.