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Karnataka government holds talks with aggregators, favours convenience fee cap at 10%, rejects flexi fare


The Karnataka government is planning to request the high court to ratify the existing ad hoc convenience fee arrangement put in place two weeks ago to break the logjam arising out of a friction between the transport department and app-based ride hailing firms.

The Karnataka High Court had on October 14 capped the convenience fee at 10% of fares, exclusive of GST, as an interim arrangement. In view of the positive feedback the government got from users of auto rickshaws, the government is planning to seek ratification of the same from the high court.

Karnataka transport department secretary NV Prasad held a meeting with executives from app-based ride hailing services including Uber and Ola in Bengaluru on Saturday morning. Both sides, however, did not arrive at a consensus as the aggregators pressed for a 25% convenience fee, including GST, on the total auto fare.

Transport department officials, however, found it too steep, and favoured continuation of the existing arrangement, sources briefed on the meeting told ET.

The executives representing aggregators also sought a flexi-fare — surge pricing in other words — but government officials did not support the idea, the sources added.

The department would now draw up proceedings of the meeting and submit that to the high court, requesting it to settle the contentious issue. But, before that, it may hold another round of talks with the aggregators on Monday, sources said.

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Ola and Uber did not respond to ET’s request for comment till press time Saturday.

The app-based aggregators and the transport department had been at loggerheads after the department asked Uber and Ola not to offer auto-rickshaw rides on their platforms, insisting that they had been licensed to offer only four-wheeled cab services. The order was triggered by media reports and consumer complaints that ride hailing apps were charging minimum fares up to Rs 100, while the state had capped the base fare at Rs 30.

The aggregators moved the high court challenging the October 6 order. Justice MG Shukure Kamal, on October 14 issued an interim direction, capping the convenience fee at 10%. The aggregators welcomed the temporary measure as it promised to pave the way for resumption of auto rides through their platforms.

The court’s interim order came after the petitioners, Uber and Ola, submitted to the court that the aggregator guidelines issued by the road transport ministry in November 2020 covered auto rickshaws as well. The guidelines were issued pursuant to an amendment to the Motor Vehicles Act, 1988, the previous year. To be sure, the transport department has all along maintained that the licences issued to petitioners under the Karnataka On-Demand Transportation Technology Aggregators Rules, 2016, limited their scope of operation to only motor-cab rides.

While welcoming the court’s interim verdict, Uber had argued against any potential cap on the commission or convenience fee when the government comes up with its new pricing policy.

Probably sensing that the government might want to make the ad hoc arrangement into a permanent one, an executive at Uber had told ET that the 10% cap, if made permanent, would threaten the viability of their operations.

Ride-hailing companies Ola, Uber and Rapido had 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 short one-kilometre rides. The companies reduced the base to Rs 30 soon after getting the government’s notice, and later reduced the convenience fee as well, as ET reported on October 12.

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

The court has also directed the transport department not to take any coercive action on the app-based firms till the petitions were disposed of. It told the app-based firms to apply for renewal or fresh licences under the regulations and asked the transport department to consider it in accordance with the law.

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