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India became the second country after China to announce National Guidelines for the regulation of taxis industry, include online booking apps or taxis aggregator. China notified its guidelines in July 2016 and was applicable from 1 November 2016. 

Ministry of Road Transport and Highway (MoRTH), Government of India has released draft Taxi Policy Guidelines to promote urban mobility. This is the second time; the ministry has released the national guidelines. Earlier, MoRTH had issued the guidelines “Licensing, Compliance and Liability of On-demand Information Technology based Transportation Aggregator operating within the jurisdiction of India” for the regulation of Third-Party App for the booking to the states in October 2015. These guidelines were not binding for the state but can be used by the states to prepare their own guidelines.

New Policy Guidelines - Expert Committee

Hon’ble Delhi High Court has advised MoRTH to revised the guidelines by incorporating suggestions from all stakeholders and formed Expert Panel. The Ministry constituted a Committee under the Chairmanship of the Secretary (Road Transport & Highways) in May 2016 and invited members from different state government, Niti Aayog, Ministry of Information and Technology, Central Pollution Control Board and Delhi Traffic Police. The committee has submitted its draft report with proposed taxi policy guidelines on 15 December 2016. The ministry will be submitting the same to Hon'ble Delhi High Court on 20 December 2016.

Motor Vehicles (Amendment) Bill 2016 - Enforcing guidelines to states 

Most important question is that how this policy document is different from earlier avatar. To understand the bigger implication, it is important to read some of the important clauses in Motor Vehicles (Amendment) Act 2016 as given below:

Section 88A - (1) Notwithstanding anything contained in this Act, the Central Government may, by notification in the Official Gazette, modify any permit issued under this Act or make schemes for national, multimodal and inter-State transportation of goods or passengers, and issue or modify licenses under, such scheme for the following purposes namely: (a) last mile connectivity; (b) rural transport; (c) improving the movement of freight, and logistics; (d) better utilisation of transportation assets; (e) the enhancement to the economic vitality of the area, especially by enabling competitiveness, productivity and efficiency; (f) the increase in the accessibility and mobility of people; (g) the protection and enhancement of the environment; (h) the promotion of energy conservation; (i) improvement of the quality of life; (j) enhancement of the integration and connectivity of the transportation system, across and between modes of transport; (k) such other matters as the Central Government may deem fit: Provided that the Central Government may, before taking any action under this sub-section consult the State Governments.

(2) Notwithstanding anything contained in sub-section (1), two or more States may make schemes for the operation within such States for the inter-State transportation of goods or passengers: Provided that in the event of any repugnancy between the schemes made by the Central Government under sub-section (1) and schemes made by two or more States under this sub-section, the schemes made under sub-section (1) shall prevail.

Section 93 (b) - "Provided that while issuing the licence to an aggregator the State Government shall follow such guidelines as may be issued by the Central Government. Provided further that every aggregator shall comply with the provisions of the Information Technology Act, 2000 and the rules and regulations made thereunder.".

These clauses clearly given more power to central government to frame new policy and guidelines. The states will need to follow the policies created by the central government. Thus, the states cannot frame new rules. In short, the new policy guidelines will be adopted by states without any discrimination. 

New Taxi Policy Guidelines - Key proposals

Some of the key guidelines mentioned in the policy documents are as follows:

1. MARKET DEFINITION- Currently, there are 4 different taxi permits - City Taxi, All India Tourist, and Radio Taxi and Rent a Cab. The new policy aims to bring aggregators, radio taxi operators and traditional city taxis under a uniform, fair and transparent regulatory framework. City taxi permits will continue to work as per existing framework without any restriction on the numbers of vehicles. Taxis with AITP permit may be allowed to ply for all purposes (both tourist and non –tourist purposes), except as street hailing taxis (reserved for city taxis). However, these vehicles will have to comply with the fuel requirements specified by the transport department in different categories.

2. LICENSING - Transport Department of State Government can issue license to aggregator, radio taxi operators or other agents under Section 93 of Motor Vehicles Act, 1988. The policy allows 90 days grace period to existing operators to register themselves. 

3. ECONOMY VS DELUXE - New Policy has proposed two categories of taxis - Economy (below 4 meters length) and Deluxe (above 4 meters length). This rationalize is based on the criterion set by the Ministry of Finance for identifying cars for lower excise duty rates and the fact that over 87% of the cars are less than 4 metres length. There should be no restrictions on the choice of the operator or aggregators with regard to composition of the fleet, i.e. deluxe and economy

4. FARE REGULATION - The fare of Economy taxis can be regaled by State Transport Department. The department can set minimums as well as maximum fares charged by the aggregators. While fixing the tariffs, the states may engage the services of transport economists and related experts who would be able to provide a scientific approach to determination of tariffs and permit charges. Further, the tariffs of Deluxe Taxis should not be regulated and be allowed to be determined by market dynamics. 

5. FARE METERS - The operators can now use mobile fare application rather than electronic fare meter. However, the algorithms used for distance and fare calculation, fare calculation etc should be checked and validated for accuracy. Quality of these software applications should be audited by from Standardisation Testing and Quality Certification(STQC) or any other agency authorised by Ministry of Electronic and Information Technology (MEITY), on a one-time basis.

6. SURGE PRICING - New policy recommends range bound dynamic pricing to be allowed to effectively match demand and supply. The maximum tariff is permitted up to three times the minimum tariff. To increase the availability of taxis during the night time, maximum tariff is allowed upto four times that of minimum tariff from 12 midnight to 5 am in morning. This would ensure adequate supply during peak hours and at night. Alternatively, the aggregators may be asked to provide the minimum fare that would be charged from the customers and the State Transport Department may fix a multiplier to cap the maximum fare. This would help in meeting the peak load requirements of the taxi users.

7. DRIVERS' REGULATION - States may place appropriate cap on the duty hours of drivers in the interest of road safety and in consonance with labour laws. Normally, the working hours and other conditions are governed by Motor Vehicles Workers Act, 1961. According to the Act, the driver cannot operate more than 48 hours in a week, whereas, the drivers work for 12-14 hours for 7 days in a week. 

8. SHARING ECONOMY - In order to provide cheaper travel solutions and to reduce the number of cars on road, sharing of seats may be allowed on aggregator based taxis with express consent of the passengers. The guidelines allow seat sharing in taxis & auto rickshaws, i.e. taxi companies can accept multiple bookings from passengers as per seat availability. 

9. RESERVED PARKING - The states should make efforts to create special Taxi Parking zones. It is proposed that at least 20% of public parking places should be earmarked free of cost for taxis and to compensate for the revenue loss the parking charges for the remaining parking lots may be increased by 25% or as may be decided by the concerned local authority/State.

10. BIKE SHARING - The State Transport Department may allow two-wheeler taxi permit on the lines similar to those for city taxi. This will offer an economical and convenient last mile connectivity solution to the citizens. It is highly recommended that existing private bikes may be allowed for such transportation in order to facilitate utilisation of idle assets and State Governments may also consider online option to allow private bikes to convert to taxis.

11. LIABILITY - In the event of an incident of a criminal nature involving a trip booked through the Radio Taxi Operator, Agent or Aggregator platform, such Aggregator, Radio Taxi Operator or Agent should immediately inform and cooperate with relevant authorities upon lawful request. Thus, there is no liability and responsibility of the operator in case of any event.

12. COVERTABILITY - The Transport Department may facilitate online conversion of AITP permit to city taxi permit or vice versa subject to compliance of regulations of City Taxi Rules. Private car owners willing to convert their cars into taxis may be permitted to apply for such permits online and may be allowed such conversion on payment of requisite fee and compliance of stipulations for tax permit.


New Taxi Policy Guidelines - Key Misses

However, there are certain areas which are not touched in this policy document, as listed below:

1. CRIMINAL BACKGROUND CHECK - There is no guidelines given related to drivers’ criminal background check or driving behaviour. This is important given there is no liability for the aggregators in case of unwanted event. 

2. DRIVER BADGE - City taxi mandates the requirement of driver badge (domicile and police verification). Whereas, there is no requirement for AITP vehicles. The new policy has proposed that all AITP vehicles should be counted as city taxis. However, no detail is given regarding this requirement. 

3. DEFINITION OF PEAK AND NON-PEAK HOUR - The policy allowed surge pricing during peak and night time. Night time is clearly defined but no criterion is mentioned for peak hour timing.

4. ACCESS TO TRANSPORT DATA - Transport aggregators will have valuable passenger transit data, which can be used for traffic planning of the city. However, there is no provision to force taxi aggregators to provide the data. 

5. FARE SETTING - Taxis aggregator can proposed their minimum fare to State Transport Department. However, the policy does not mandate that the minimum fare should not be less than cost of operation and it should not use as tool to dominate the market. 

6. OTHER PARA-TRANSIT - The policy only tried to liberalise Taxis, Two-wheelers Taxi and e-rickshaws. But, Auto-rickshaw segment is not covered. With more than 4.5 million auto-rickshaws in the country, this is one of the important mobility providers. 

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