India plans to cap the commissions app-based taxi aggregators such as Uber Technologies Inc and home-grown Ola earn on rides to a maximum 10 percent of the total fare, according to a draft proposal seen by Reuters, a move industry experts warned would hit revenue and operations.
Such a law would be another blow to San Francisco-based Uber after the ride-hailing firm was stripped of its license to carry paying passengers in London on Monday for the second time in just more than two years over a “pattern of failures” on safety and security.
The Indian government has proposed reducing the commission from the about 20 percent of the total fair charged at present, the 23-page document titled Central Guidelines for Aggregators says.
Photo: Reuters
The government has also proposed stricter safety checks for drivers and wants to cap their working hours at 12 per day, amid fears long shifts are putting passenger safety at risk.
The Indian Ministry of Road Transport and Highways did not respond to a request for comment outside working hours. Uber and Ola also did not respond.
The proposal could still change, but industry experts say it could halve Uber and Softbank-backed Ola’s revenues from rides.
India accounts for an estimated 11 percent of Uber’s global rides annually.
“The 10 percent [commission] is not viable, it has to be something around 20 percent,” former Ola corporate president of new initiatives Joy Bandekar said, adding that the system could not survive at the lower rate.
India is a key growth market for ride-hailing companies as people seek to avoid driving themselves on its congested roads.
To boost safety, the proposal says taxi companies should set up a control room that can track vehicles and conduct a facial recognition check of drivers every three hours.
The companies should also provide insurance for drivers and riders, and store all the data collected on the app on a local server for two years, it says.
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