Green signal for Uber, Ola as Centre rules out app ban; services to be regulated under Motor Vehicles Act

NEW DELHI: India has decided against banning cab-hailing apps like Uber and Ola but will impose conditions to make their operations safer.

The transport ministry, headed by Nitin Gadkari, is likely to issue an advisory within the next three weeks to all states which will clearly state that these services have to be regulated under the Motor Vehicles Act but there is no case for banning them. The government wants to promote IT-based taxi companies.

It wants to restrain states from banning such services because of overzealousness, a ministry official told ET.

Top executives of Uber and Ola have met Gadkari and other senior officials in the road transport ministry to air concerns about repeated threat by various states to ban these apps which are used to aggregate taxis. “There has to be a proportionate amount of check and responsibility.

We don’t want a ban since competition has to increase. IT is adding a lot of value to the system,” the ministry official said.

However, the apps, government officials say, come within the purview of the Motor Vehicles Act as they are used to solicit services for transport, thus rejecting the contention of some of these companies that they do not run taxi services and should be governed by the IT Act. “Uber is ready to accept all conditions, but Ola does not want to be clubbed with the rules for radio taxis,” the official added. Ola argues that it does not operate a taxi service but only acts as an aggregator. Uber has also adopted the same stance in the past though it appears to have changed its mind, at least with regard to its operations in India.

The ministry’s draft has also included the term aggregators in order to bring ITenabled apps under the legal framework of the new road safety Bill. Until now these online apps were not governed by any regulation. While the pan-India advisory is likely to be finalised between 15 days and 3 weeks, it will not be legally binding. However, the Centre will urge the states to accept the guidelines. States will be given a list of dos and don’ts to provide a level playing field to app-based services.

“The Delhi Uber rape incident taught us that there is a sense of responsibility which is missing among operators -- both IT and otherwise. We will put checks on that,” the ministry official said. The government also feels that once proper guidelines are put in place, “profit margins of unproductive layers in these IT-based systems” will decrease. The benefit would go both to the owner and the customer.

The advisory is being issued as an interim measure till a new Motor Vehicles Act is finalised. The road transport ministry is proposing amendments to the Road Transport and Safety Bill to empower authorities to act against any wrongdoing or lapses by such service providers.