India Proposes Limiting Ride-Hailing Commissions

India is considering a proposal to cap the commissions on app-based ride-hailing firms, such as Uber and Ola, to a total of 10 percent of the full fare, Reuters reported on Wednesday (Nov. 27), citing a draft document it reviewed. The move could reduce ride revenues by a total of 50 percent. The commission is now about 20 percent of the total fair charged, according to the 23-page document titled “Central Guidelines for Aggregators.”

The Indian government also wants to cap ride-hailing drivers to a maximum of 12 hours per day as part of its initiative to increase safety. The government fears that longer hours could jeopardize passengers’ safety.

To further promote safety, the government’s draft proposal calls on cab companies to track vehicles, and conduct a facial recognition of drivers every three hours. In addition, companies should offer insurance for drivers and riders, and keep data on a local server for two years.

India accounts for about 11 percent of Uber’s rides internationally each year. The country, however, is considered a “key growth market” for ride-hailing companies. India’s finance minister has even said that auto sales have slowed because of rail-hailing firms.

“The 10 percent [commission] is not viable; it has to be something around 20 percent,” said Joy Bandekar, a former executive at Ola. She added that the company won’t last at the proposed lower rate.

“We are planning to release the draft [aggregator rules] for public feedback sometime next week,” an official told The Economic Times. “It will largely be in line with the guidelines that were shared, with a few small changes.”

The final rules are likely to be formalized before the end of the year.

“Ride-hailing is one of the best solutions for India. One cab replaces 10 personal cars on the road, and 35 percent of personal car trips at any given point remain idle,” said one of the senior officials. “This is what causes congestion.”  

Uber started experimenting with an interface that brings together ride-hailing and food delivery. The move will allow users in India to choose Eats or Rides with equal visibility.