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In Bengaluru, apps must cap fee at 10% of auto fare

The Karnataka High Court, in an interim arrangement on Friday, capped the convenience fee chargeable by app-based aggregators for autorickshaw services in Bengaluru at 10% of fare.

This is exclusive of the goods and services tax (GST) to be collected on the total fare, as before.

Justice MG Shukure Kamal issued the interim direction after ride-hailing companies Uber and Ola failed to reach an understanding with the state transport department over fares. A meeting was held on Thursday in deference to the court’s suggestion, but the two sides held their respective positions, sources told ET.

“We welcome today’s court order,” Uber said in a statement, adding that the direction gives legitimacy to the service. “It recognises that auto drivers have the right to operate using aggregator platforms. It also recognises that platforms like Uber can charge a booking fee, which allows them to cover their costs and continue to provide services.”

Ola declined to comment on the high court’s new directive.

On October 6, the
Karnataka transport department issued a notice to all ride-hailing apps, asking them to stop accepting autorickshaw rides as they were licensed to offer only four-wheeled cab services.

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The authority had also stated that ride-hailing apps were charging minimum fares going up to Rs 100, while the state had capped the base fare at Rs 30.

Disagreement over scope of ops

The interim order came after the petitioners, Uber and Ola, submitted to court that aggregator guidelines issued by the road transport ministry in November 2020 covered autorickshaws as well.

The guidelines were issued pursuant to an amendment to the Motor Vehicles Act, 1988, the previous year.

The transport department, though, has maintained all along that licences issued to petitioners under Karnataka On-Demand Transportation Technology Aggregators Rules, 2016, limits the scope of their operation to only motor cabs.

On Friday, the petitioners also prayed for increasing the cap on convenience fee to 20% of fares.

Threat to viability

While welcoming the court’s interim verdict, Uber argued against any potential cap on the commission or convenience fee when the government comes up with its new pricing policy. The 10% cap on commission, if made permanent, will be a blow to aggregators, as it will bring down their income significantly, company executives told ET.

Uber, in its statement, argued that commission caps will “threaten the viability” of the business, “impact the tens of thousands of auto drivers who rely on it for their livelihoods and will result in the shrinking of this fledgling category.”

“We will continue to engage with the government to find ways of regulating the sector in a way that allows for riders, drivers and platforms to benefit from technology that has truly transformed urban mobility,” it said.

Advocate General Prabhuling Navadgi, appearing for the government, sought time from the court for fixing these rates in accordance with central guidelines.

More talks

The interim order is expected to break the logjam for the time-being and facilitate smooth operation of app-based auto rides at regulated fares and charges.

The Karnataka High Court
asked the state government to hold another round of talks with the ride-hailing companies to try and reach an understanding.

Lately, ride-hailing companies Ola, Uber and Rapido have charged a convenience fee of as much as Rs 47, after tax, on top of a Rs 60 base fare, which led to customers paying above Rs 100 even for a kilometre’s ride. The companies reduced the base to Rs 30 soon after getting the notice, and later reduced the convenience fee as well, as ET reported on October 12.

The convenience fee, which goes to aggregators, has largely remained fixed and not been a function of distance covered. This fee has been a bone of contention for the government and aggregators.

On Friday, the judge also directed the transport department not to take any coercive action on the app-based firms till the petitions were disposed of. The court told the app-based firms to apply for renewal or fresh licences, as may be the case, under the regulations and told the department to consider them in accordance with the law.

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