Explained: Ola and Uber Regulations under the Motor Vehicle Amendment Act, 2019

The Ministry of Road transport and highways has come up with the much-awaited motor vehicle aggregator guidelines for US-based Uber and Bangalore based Ola cabs. These guidelines came under the Motor Vehicle Amendment Act, 2019. Through these guidelines, the Government of India came with various procedures related to grant of license to aggregators, compliance with regards to vehicles, regulation of fares and many more. The license will be provided by the central and the respective state governments.

The said decision was taken because cabs were not regulated by anyone and that’s why both platforms charge 25% commission from drivers and higher earnings during peak working hours. The prospects of reduced earnings come during the times of slowdown due to the Covid-19 pandemic, with both platforms estimated to be operating at less than half of the rides compared with pre-Covid-19 levels, according to data from a survey.

Who is an Aggregator?

An Aggregator can be defined as per the Motor Vehicle Amendment Act, 2019 a digital intermediary or marketplace for a passenger to connect with a driver for transportation. The app would mean an electronic operated by the Aggregator which can be accessed through a computer or a communication device. 

Guidelines for Aggregators under the Amendment Act

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The government has asked aggregators to make sure that every driver is provided with health insurance integrated with the aggregator for an amount not less than Rs 5 lakh with the base year 2020-21 and increased by 5% each year. Additionally, the guidelines also asked them to provide term insurance of Rs 10 lakh to every driver. The aggregator will also need to conduct refresher training programmes for the drivers. Compulsory five-day training of the drivers which will include topics such as efficient use of the app, provisions of the MVA, 1988, careful driving, maintenance of the vehicle, road safety, etc.

The said guidelines also made amendments for apps such as making the app accessible in English and Hindi both languages. In those states, Hindi is not an official language they have to add one official language for the respective state. Also, the language should be understandable to the driver.

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Both the companies have to store the data in India for a minimum of three months and a maximum of twenty-four months. The saved data on the request of the respective state government and with the law process can be given to the state government and the data of the customer cannot be shared with anyone without that customer’s consent. These guidelines took some steps in the direction of women safety by allowing an option for women passengers to travel with other women passengers only. As far as the fares are concerned the aggregators have been allowed to charge a fare 50% lower than the base fare to promote asset utilisation. For drivers, the guidelines say that the drivers should get 80% of the applicable fare and only 20% of the commission to the aggregators.

What will the Amendment Act Change Now?

After recommendations of the Group of Transport Ministers of States, the central government introduced the Motor Vehicle amendment bill to amend the Motor Vehicle Act, 1988 after which was passed by both the houses and signed by the president of India and which became the Motor Vehicle Amendment Act, 2019.

The act has introduced heavy fines for violating traffic rules such as drunken driving, driving without a license, dangerous driving, over speeding, etc. These penalties will be increased by 10% every year as notified by the central government. The act also protects those people who render emergency medical or to someone who renders non-medical assistance to the victim.


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