Karnataka govt cannot over-regulate app-based aggregators by deciding revenue sharing models: IAMAI

App-based aggregators’ representative Industry body, the Internet and Mobile Association of India (IMAI) on December 1 said that the government’s task as a facilitator of business should not extend to over-regulating the sector by deciding the revenue-sharing models and added that this bodes negatively from investment point of view as also ease of doing business norms.

This comes amid the ongoing tussle between the Karnataka Government and ride-hailing platforms Ola, Uber, and Rapido over commission charges and the legality of plying autos.

“It may further be noted that the Motor Vehicle Aggregator Guidelines, 20210 published by the Ministry of Road Transport and Highways, in addition to recognising that auto rickshaws can be aggregated by the aggregator platforms, has also allowed for a 20% commission to be charged by such platforms,” the industry body said in a representation letter to the Transport Secretary and Transport Department in Karnataka on Thursday.

Karnataka's transport secretary had on November 25 proposed a commission of 5 percent exclusive of GST be levied by the app-based auto aggregators Ola, Uber, and Rapido, which is lesser than the Karnataka High Court’s temporary orders to keep the commission at 10 percent.

The final decision on the commission will be taken by the High Court next week.

“Any amount that is retained by the aggregators as platform fee is to cover the high costs of operations and cost of developing technology for a better user experience. Any cap on the platform free receivable by the aggregators will severely impair the decisional capacity of the aggregator,” IMAI’S letter said.

The industry body has suggested the Karnataka government introduce a flexible pricing model to incentivize drivers to increase the supply of their services during abnormal weather, festivals, end of concerts/shows/sports events, and rush hours.

“The Government should allow for a flexible pricing regime to optimise driver availability and rider demand at a hyperlocal level and in real-time,” it said.

The body has also said that the Auto rickshaw fares must be revised on a regular basis and such revisions should be linked to inflation as well as other macroeconomic factors that affect the running and living costs incurred by the operators of such auto-rickshaws.

“To ensure greater compliance with metered fares, it is important auto fares be revisited on a yearly basis or whenever fuel prices increase by 25%,” the letter said.

During stakeholders meetings conducted by the Karnataka Transport Department several issues were voiced by auto drivers, citizens, and mobility experts and many said that the commission should be completely removed or the state should launch its own app.

During the last meeting held on November 15th, the Karnataka Transport Commissioner SN Siddaramappa clarified that developing a new ride-hailing app by the state will be time-consuming and difficult.

Uber too in a blog post wrote that it may limit the auto services in some parts of Bengaluru. Running the business may turn nonviable.