Ola, Uber vs K’taka govt: The debate on whether state is stifling innovation

Are rigid govt regulations stifling innovation or cab aggregators need to follow regulations just like others?
Ola, Uber vs K’taka govt: The debate on whether state is stifling innovation
Ola, Uber vs K’taka govt: The debate on whether state is stifling innovation
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App-based taxi aggregators need to be open to some regulations and the government too should change according to evolving needs and technologies were some of the observations made in a panel discussion held by Uber in association with industry-body NASSCOM in Bengaluru on Wednesday. 

The topic of the discussion was "Progressive cities for Disruptive Businesses" and this comes at a time when cab-aggregator companies and the state government have been sparring over the recently introduced Karnataka On-demand Transportation Technology Aggregators Rules, 2016. 

Among the panelists were TV Mohandas Pai (Chariman of Manipal Global Education), Dr A Ravindra (former Chief Secretary of Karnataka government), Revathy Ashok (Managing Trustee and CEO of BPAC), RK Mishra (founder director of Centre of Smart Cities) and Pawan Srinath (Head, Strategy and Programmes, Takshashila Institution). 

Most of the panelists agreed that app-based cab services have indeed expanded the existing market and has proved beneficial to both customers and drivers. 

Pai however felt that, at present, there are too many barriers to innovation with new firms in the market being attacked by older players using existing structures. 

"Our mindset is very controlled," he said. "But now we are seeing a rise of the young people who don't understand these rules. Companies such as Ola and Uber have disrupted the older models."

According to RK Mishra, the government has "miserably failed", in all sectors including transportation, to govern the city. 

"The government always fails to appreciate the disruptive nature of technology that gives competition to monopoly. So even though it intends to work for public interest, it ends up catering to specific interests," he said adding that we need sensible laws. 

Although most of the panellists were in unison in favour of private taxi aggregators, Ravindra was the most critical of the so called "disruptors" stating that innovations have to comply with the legal framework as it does in other industry sectors.

"The government is open to innovation, there is no doubt about that. But there is also something called a legal framework which applies to all sectors. We can debate on some of the provisions. It however doesn't mean we can deny its existence," he said. 

While he mentioned that there was no denying the advantages of app-based cab aggregators, he also spoke about how the transport department wanted them to obtain licenses and operate as a legal entity before the latter could address their concerns. 

"We need an open dialogue between the government and private operators," he said. 

Coming to surge pricing- the Regulations state that fares should be charged according to the digital metre and cannot exceed the fares fixed by the government- he said there is a need to distinguish between dynamic pricing- which can be reasonably flexible-, and surge pricing which is exploitative. Giving an example, he said that during the recent IPL matches in the city, some people got an 8x surge pricing. "It can't be exploited."

Uber however spoke in support of its surge-pricing model stating it simply worked on the demand-supply model and that it worked as an incentive for drivers.

“Less than 20% of trips surge. 90% of cars surge less than 2x. After the introduction of the Regulations, 25% of passengers did not get a ride as compared to 5% prior to it,” Bhavik Rathod, GM (S&W), Uber said.

One of the regulations mentioned in the Aggregators Rules was the fixing of a panic button in the cab. 

While Revathy Ashok said that though space for a panic button is required, one cannot depend on phones because they can simply run out of battery or can be, like another panelist said, be snatched easily. Similar one placed inside the cab, could be disabled by anyone. 

Hence it is not just the panic button, but the "what-happens-once-I-press-the-panic-button" which matters most. 

Uber in its defense said that it has actively been engaging with the government and that they are in fact pro-regulation. 

"When the draft Regulations were released in February, we thought it was quite progressive. But when the Regulations were notified in April, it was very different from the draft," Rathod said adding that the rules were not in sync with evolving technology. 


The government introduced the Karnataka On-demand TransportationTechnology Aggregators Rules, 2016 in order to ensure the safety of passengers who use cab services through On Demand Transportation Technology Platforms (ODTTP) and to regulate the functioning of taxi aggregators.

Ever since, there have been constant rows between cab aggregators and the transport department with the Aggregators rules being a bone of contention between both.

In May, a city-based taxi app filed a petition in the Karnataka High Court questioning the legality of the new transport laws introduced by the state government. 

According to the company, Helion Technologies Private Limited, the rules were made erroneously under Section 93 of the Motor Vehicles Act, 1988.

“Section 93 of the Motor Vehicles Act, requires that any person engaged in soliciting customers for travel by public service vehicle is required to obtain a license from the appropriate authority...However, we are providing a digital platform, whereby, we connect existing taxi drivers holding valid permits, to passengers seeking taxi services, through the mobile application. Hence, we come under Information Technology Act, not under Motor Vehicles Act”, the petitioner company contended as reported by The New Indian Express

While the HC refused to put a stay on the Aggregator rules, it ordered the issue of a notice to the state government. 

The friction between the state government and cab aggregators in the city intensified to an extent last month when the former ordered aggregators, operating in continued violation of its rules, to stop operations. 

The transport department issued a circular stating that cab-aggregators that are operating unlicensed cabs in the city will have stop their operations with immediate effect, The Times of India reported. 

Over the last several weeks, hundreds of cabs were also impounded in the after the department found them to be violating the Aggregator Rules, 2016.

However later, the high court directed the department to not seize cabs Ola and Uber affiliated cabs and also asked the later not to demand surge price from customers.  

"The Karnataka High Court has directed the cab operators not to demand surge price from commuters, and we as the government agency will honour the ruling of the court, asking us not to impound cabs affiliated to Uber and Ola for plying without license," State Transport Commissioner Rame Gowda told PTI.

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