Uber, Ola told to stop operations in Bangalore or else…

Uber and Ola have hit another roadblock in India as the authorities in the state of Karnataka (whose capital city is Bangalore) issued a circular to them yesterday to stop running cabs until they obtain the required ‘cab aggregator’ licenses from the transport department.

A few months back, the Indian government had issued an advisory [pdf] for “licensing, compliance, and liability of on-demand information technology based transportation aggregators.” Uber had viewed it as a progressive move to have different rules for taxi operators and ride-hailing platforms. “Uber welcomes the opportunity to work with the state governments to adopt reasonable regulatory provisions in the spirit of the central guidelines,” Amit Jain, president of Uber India, had said.

Under India’s federal structure, however, the transport department of each state is free to interpret the central guidelines and make its own rules under the Motor Vehicles Act. The Karnataka authority came out with new licensing regulations for ‘cab aggregators’ in April, and Uber immediately filed objections.

See: Here’s the Uber playbook on negotiating with regulators

Surge pricing

Photo Credit: FutUndBeidl.

The main bone of contention was surge pricing. Uber argued it’s consumer-friendly because it makes cabs available at peak hours; the authorities maintain that the point about allowing ride-hailing apps is to bring down costs for consumers. What about convenience, many would counter. After all, what’s the point of a price cap if cabs are unavailable – which is how it used to be before the taxi apps arrived on the scene.

Be that as it may, it’s an argument that threatens to put a crimp on ride-hailing apps in Bangalore. Over the past couple of months, traffic policemen have been imposing fines and seizing cabs for plying without the new licenses. Drivers affected by this held a protest demonstration in front of the Uber office in Bangalore.

Uber has been stalling with objections filed with the transport department. Apart from the surge pricing issue, they relate to requirements such as installation of meters in the cars just as in traditional taxis. Once the new licenses are accepted, all their provisions will become a precedent for regulatory disputes in many other places. Hence, the apparent reluctance on the part of Uber and Ola. They did apply for the new licenses, but the transport authority says the applications are incomplete.

The latest circular from the transport authority, however, threatens to bring matters to a head. It essentially says that cabs on the Uber and Ola platforms are violating the rules by continuing to operate without licenses, the ride-hailing platforms have been unresponsive to the authorities, and punitive measures will be stepped up.

Tech in Asia has reached out to both Uber and Ola for comments on this, and is yet to hear from them. Meanwhile, when I last checked, Uber cabs were still running in Bangalore, thankfully.

See: I fell for Uber’s safe image because I didn’t – and still don’t – have better options