Government Releases New Guidelines for Cab Aggregators, Allows Surge Pricing Up to Twice the Base Fare
In a significant update to ride-hailing regulations, the Ministry of Road Transport and Highways has issued the ‘Motor Vehicles Aggregator Guidelines 2025’, bringing in revised fare structures, safety mandates, and operational rules for cab aggregators such as Uber, Ola, and Rapido.
Among the key provisions, aggregators will now be allowed to charge up to twice the base fare during peak hours, an increase from the previous cap of 1.5 times.
During non-peak hours, however, fares must not drop below 50% of the base fare, ensuring a balanced fare model across time bands.
Fare Structure and Minimum Charges
The revised guidelines state that the base fare for any ride shall be the fare notified by the respective state government for the category or class of vehicle.
Additionally, to account for what is referred to as “dead mileage”—the distance traveled without passengers or the fuel consumed while picking up a rider—aggregators must ensure that the base fare covers a minimum distance of three kilometers.
States have been encouraged to adopt and implement these updated guidelines within three months.
Cancellation Penalty Rules for Drivers and Passengers
The guidelines have also set clear terms on cancellation penalties. If a driver cancels a ride without a valid reason, they will be penalized 10% of the total fare, with the penalty capped at ₹100.
Similarly, passengers cancelling without a valid justification will also be liable to pay the same penalty.
“Valid reasons” will be determined based on criteria set by the aggregator and must be communicated to both drivers and passengers.
Operational and Licensing Framework
To streamline operations, the Centre will develop a single-window digital portal for aggregators to apply for licences. The licence fee has been fixed at ₹5 lakh, with each licence valid for five years from the date of issuance.
Additionally, aggregators must appoint a dedicated Grievance Officer to handle user complaints and ensure swift resolution.
Insurance and Vehicle Eligibility Norms
In a move to enhance driver welfare, aggregators are required to provide:
-
Health insurance coverage of at least ₹5 lakh per driver
-
Term life insurance coverage of ₹10 lakh per driver
The guidelines further clarify that no vehicle older than eight years from its original registration date may be onboarded onto an aggregator platform. Aggregators must ensure their fleets comply with this limit to maintain safety and service quality.
Strengthened Passenger Safety Measures
Passenger safety remains a core focus of the new policy. The guidelines mandate the following:
-
All vehicles must be fitted with Vehicle Location and Tracking Devices (VLTDs) that are fully operational at all times.
-
Drivers must adhere to the route provided by the aggregator app. If there is any deviation, the app must immediately trigger an alert to a control room, which is to contact both the driver and the passenger without delay.
-
Aggregators must operate a 24/7 call centre, with contact details prominently displayed on their website and mobile app. Support must be provided in English and the official language of the concerned state.
Push for Greener Fleets
Reinforcing the government’s commitment to cleaner transportation, the guidelines make it mandatory for aggregators to meet state-defined electric vehicle (EV) inclusion targets. These targets will be set either by the state governments or the relevant authorities responsible for air quality and environmental regulation.
The new 2025 guidelines are an evolution of the Motor Vehicle Aggregator Guidelines first issued in 2020 under Section 93 of the Motor Vehicles Act, 1988.
In the years since, India’s shared mobility sector has grown exponentially, with increased demand for flexible and cost-effective options including bike taxis, electric vehicles, and auto-rickshaw integrations.
The updated guidelines aim to reflect the transforming landscape of urban transport while balancing consumer safety, driver welfare, and the operational autonomy of aggregators.
