Ola, Uber Commissions Might Soon Be Capped To 10% With New Guidelines

Ride hailing firms have been experiencing increased adoption in India due to a variety of reasons. So much so that the surge in their use was recently blamed by the Finance Minister for the slowdown being experienced in the Indian automobile industry. True or not, the escalating use of such services does call for a regulatory check on their operations. Recent reports now indicate that this might be next on the cards.

India¡¯s federal government is looking to set guidelines for such ride-hailing firms in question, primarily Uber and Ola. A recent report by Reuters hints that a 23-page document titled "central guidelines for aggregators" is already in the works for the same. Among other focus points, the document mentions an upper cap for the commissions earned by the facilitators per ride.

As per the report, Uber and Ola currently enjoy a commission of around 20 percent of the total fair of the ride. The draft proposal now plans to restrict the same to 10 percent. If brought to effect, the move is expected to impact the revenue and operations of these services, potentially cutting the revenue down to half as per some experts.

Joy Bandekar, a former executive at Ola, for instance clearly mentions that the system could not survive at the proposed rate. "The 10 per cent (commission) is not viable, it has to be something around 20 per cent," he was quoted as saying in the report.

The draft proposal also focuses on the safety of the rides offered through such services. Along with stricter safety checks for the drivers, an important point raised by the proposal is a limit on their working hours. The new guidelines want to cap the maximum working hours of a driver to 12 hours a day, eliminating any possibility of an exhausted driver behind the wheel.

Lately, Uber and Ola have cut down on the incentives offered to their driver partners while increasing the fare charged to the user. This has already led to a growing disinterest among the driver partners. An upper cap on what the aggregators earn out of the ride bookings might indirectly result in a further reduction of incentives for the driver partners.

Apart from the guidelines on the revenue earned, the government¡¯s draft proposal also directs the cab aggregators to track their vehicles through a control centre as well as put in security checks in place like a periodic facial recognition. In addition, the aggregators might also be required to provide insurance for drivers and riders as well as store all the app data on a local server for two years.

So as the use of ride hailing services sees more growth in India, the said guidelines might be brought to effect soon to regulate their operations as per the best interest of the commuters. As for the economic impact of the same on the service providers, only time will tell if the new and regulated metrics work for them or not.