Mumbai, known as financial capital of India, is one of the megacities in the world with a population of 21.0 million (UN 2014). Mumbai contributes around 22% of the state income of Maharashtra. It is also the wealthiest city in India and has the highest number of billionaires and millionaires among all cities in India. It is also commercial and entertainment capital of India.

Mumbai has one of the good public transport systems in the country. Most of commuters travel by suburban railways and buses. However, the city recently introduced new modes of transport including Mono Rail and Metro System. Public transport system is complemented by good para-transit network.

Taxis – Key mode of transport

Taxis are also one of the key modes of transport in the city. Although, Suburban railways carries 5.0 million passengers / day and BEST buses carries around 3.5 million passengers / day. Taxis still play a crucial role to move people within city.

Numbers of taxis in Mumbai

Mumbai is the only city which has large numbers of Black & Yellow Taxis for city service (also known as Meter-fitted Taxi). Street Hail or Black and Yellow Taxis or Cool Cabs are governed under Section 74 of Motor Vehicles Act 1988 with minimum engine capacity of 980 CC operate on CNG, and these taxis operate on regulated fare with meter and the number of permits of these taxis has been restricted.

Evolution of Taxi Market in Mumbai

In order to provide better quality vehicle with air-conditioning, Government of Maharashtra introduced the fleet taxi scheme in 2006. The taxis under Fleet Taxi Scheme of 2006 are high end (more than 1400 CC engine capacity and air conditioned) operating on existing permits issued originally for Black and Yellow taxis.

In 2010, the government launched new policy to introduce using call centre. Taxis under Phone Fleet Taxi Scheme, 2010 are also high end (more than 1400 CC engine capacity and air-conditioned) operating on permits, a limited number of which were auctioned and sold at then discovered price of INR 261,000 per permit and Taxis under both schemes offer almost exclusively pre-book rides and the taxis are metered and use CNG as fuel. Meru is one of the largest fleet operators in this category.

Emergence of new age technology companies

Olacabs started its journey from the city of Mumbai. The company started using available taxi fleets, mainly tourist taxis. It is estimated new technology companies are operating around 20,000 taxis in the city. The vehicles operating under All India Tourist Permits issued under section 88 (9) of the Motor Vehicle Act, 1988 can be offered only to tourists for hire on time basis or on point to point basis within and outside the State and these taxis are regulated by the Central Motor Vehicle Rules, which are framed by the Central Government and have no regulation on fare or type of fuel.

New City Taxi Scheme 2016

Government of Maharashtra has introduced new “Maharashtra City Taxi Rules, 2016” to govern App based taxi aggregators in October 2016. These rules shall be applicable in the Mumbai Metropolitan Region. Some of the key highlights of new scheme are as follows:

a)  The policy reorganizes the importance of app-based technology players and introduced new permit category “App Based City Taxi Permit” to work with taxi aggregator

b)  The vehicle should be driven on clean fuel i.e. unleaded Petrol or CNG or LPG or Hybrid or Electrical (power rating of electric vehicle will be specified by the State Transport Authority)

c)  Each taxi shall have engine capacity of not less than 980 CC with seating capacity not exceeding seven including driver

d)  The aggregator should have at least 50% of the total taxis attached with engine capacity of 1400 CC or more

e)  The licensing authority shall prescribe the minimum and maximum limit for rates of fare for each category of vehicles. However, the government will not prescribe any fare for vehicles with engine capacity of 2000 cc or more.

f)   A separate colour scheme shall be as specified by the Government for all the taxis operating under App Based City Taxi Permit of the licensees under these rules

g)  The driver shall have a valid commercial driving license to drive a Taxi and a valid Public Service Vehicle Badge issued by the Licensing Authority

h)  Each licensee should have minimum number of 1,000 vehicles and shall furnish security by way of a Bank Guarantee of INR 5,000,000 per 1000 vehicles or part thereof

i)   Vehicles operating under All India Tourist Permits issued under sub-section (9) of section 88 of the Act shall not be allowed to operate under these rules. However, the government allows to convert AITP to App-based City Taxi Permit

j)   The Fee in respect of a licence for each permit granted under section 74 of the Act shall be:

     Motor Cab having engine capacity less than 1400cc – INR 25,000

     Motor Cab having engine capacity 1400 cc or more – INR 261,000

k)  The permit fees paid in respect of permits under the Fleet Taxi Service Scheme 2006, Phone/Fleet Taxi Scheme 2010 and Call Taxi Scheme 2010, shall be set off from the permit fees prescribed and payable as above

This is still a draft scheme and the governemnt has sought suggestions and objections from the citizens on the same by Novemer 5, 2016. However, the government has not finalized the scheme yet owing to upcoming policy guidelines from Ministry of Road Transport and Highway (MoRTH), Government of India. 

Key gap areas

The policy is forward looking and has tried to address all key issues. However, there will some more clarity require on the following points:

a)  No Service Level parameters defined in the policy documents in terms of average waiting time, customer feedback etc.  

b)  Are App based city taxi permit holders allowed to work with multiple operators or switch operators?

c)  How and when the operators can ban or suspend the driver from the system? As policy does not allow drivers to work with any other players

d)  Is it allowed to operate vehicles with or above 2,000 cc under the aggregator model? Fuel requirement, if any?

e)  Will the aggregator need to deposit security amount on total numbers of registered vehicles or active fleet?

Policy Integration

The government has created new city taxi scheme to integrate the taxi aggregator. However, the focus should be to reform the whole sector rather than just addressing one issue at the time.  The regulation should also see that how the existing taxis and vehicles can be used under new technology platform.

Some of international examples are:

I.   RTA Dubai has signed agreement with Careem to integrate the existing taxi players with the new age technologies companies

II.  Recently, Grab Taxi has tie-up with Silver Cab (One of the legal operator) for the supply in Singapore

III. SPAD Malaysia has unveiled new plan - Taxi Industry Transformation Programme (TITP). Under the initiative, the authority has tried to reorganize the traditional taxi market and also introduce new policy initiatives to integrate on-demand taxi players

IV. In Victoria (Melbourne), the city government has proposed a compensation for the existing taxi permits holders during the transition period. The city is offering license holders - $100,000 for first license and $50,000 for second license.