Ban on bike taxis in Delhi leaves in its wake disgruntled student passengers and confused drivers

While the Supreme Court denied Rapido's request for relief, it did order the state government to develop a bike taxi policy by March 31.

Pranjal (name changed), a law student in Delhi uses a bike taxi from Uber or Rapido for her everyday commute from her home in Malviya Nagar to the nearest metro station, as this mode of transport is affordable and doesn’t take more than two minutes to hail.

Though Pranjal is able to book a bike taxi through the app, despite a state-wide ban in Delhi on Ola, Uber, and Rapido bike taxis, the bike riders are requesting passengers to cancel the ride on the app and pay via cash as there is ‘increased scrutiny from the traffic police’ post the ban.

“I was okay using bike taxis till now, because it is cheaper and safer. At least my ride was getting tracked on the app. Without this feature I don’t think I can use bike taxis,” she said.

Pranjal is not alone. Many residents, especially students from Gurgaon, Noida, and other towns in Haryana are facing similar issues while booking bike taxis.

“I use bike taxis as it is the best option for last-mile connectivity. Without this, I have to walk around a kilometre to catch a local shared taxi and reach the metro, and go to my college. It just was an easier and affordable choice,” said Aroon Mohan, a student from Noida.

The Delhi Transport Department on February 20 issued a public notice to ride-hailing platforms Ola, Uber and Rapido to stop plying their bike taxi services effective immediately.

“It has been brought to notice that two-wheelers having non-transport (private) registration mark/numbers are being used to carry passengers on hire, which is a purely commercial operation and a violation of the Motor Vehicle Act, 1988,” the transport department said in the notice.

The decision comes just weeks after the Supreme Court declined relief to the bike, taxi and auto aggregator Rapido, which challenged the Bombay High Court's order directing the company to stop operations in Maharashtra immediately as it does not have a license to operate bike, taxi or rickshaw services.

Confused bike taxi drivers

While the apps have not removed this feature from the phones yet, riders, or ‘bike taxi Captains’ as Rapido addresses them, did not receive any communication on the ban.

“We did not receive any intimation about the ban. We came to know about it when a policeman stopped us, seeing us using maps on our phone and riding, and asked us to stop the service and let off the pillion rider. I did not get paid for that ride. I was told I will be fined for this,” said Anand Kumar to Moneycontrol.
Many riders have taken up bike taxis as a side hustle.

“I’m a parcel delivery person and I thought this will be a great second income for me. Many of my friends are being charged heavy fines. I have stopped using the taxis,” said another bike taxi driver who uses Rapido.

The transport department also highlighted that first violation will result in a penalty of Rs 5,000, and the second and subsequent offense will attract a fine of Rs 10,000 and imprisonment.

“In addition, the driving license of the driver will be suspended for a minimum period of three years,” the notice from the Delhi government said.

The Internet and Mobile Association of India in a letter has requested state governments to not penalise the drivers and digital platforms.

“In the absence of policies notified under either Section 93 or Section 66 of the Act, we request that no coercive steps be taken against vehicle owners or digital platforms and a stakeholder consultation be organised at the earliest to discuss the way forward,” the letter by IAMAI said.

The bike taxi journey

Bike taxis are a very popular mode of urban mobility in Southeast Asian countries, including Thailand, Vietnam, and Indonesia.

In fact, as per reports by Research and Markets, The Asia-Pacific Two-Wheeler Taxi market is poised to register a compounded annual growth rate (CAGR) of over 25 percent over the forecast period of 2023-2025.
Gojek is a popular player in these countries.

Rapido, which was started as a pure-play bike taxi player in 2015, aimed at providing an income-generating opportunity to two-wheeler owners and creating affordable urban mobility for citizens.

Ola and Uber were quick to adopt the same. The model kicked off very fast in most states, including Maharashtra and Kerala.

In 2018, around 13 states and Union Territories in India permitted bike taxis to operate, including in New Delhi, Maharashtra, and Karnataka.

Legal challenges started brewing for Rapido at the beginning of 2019 as several state governments started flagging issues of violations. For example, Madras High The court banned Rapido bike taxis.

“The biggest risk involved in this bike taxi service is that the rides are not legally insured…In Rapido, bikes only have personal insurance coverage. This means it will cover only the rider and not the third party, i.e. passenger. Hence, victims are left helpless in case of any mishap,” the court said. However, Rapido continues operations in some parts of the state.

The recent blow to the company was the Maharashtra Government announcing a ban on bike taxis citing license issues.

The legal challenges for bike taxi players have rippled across states in India.

Business impact

While industry sources say the impact on Ola and Uber may be very minimal as most of their revenue comes from auto and cab services, Rapido’s impact and business sustainability are dependent on the faster resolution of the legal challenges.

In fact, Rapido’s losses widened 2.6X in FY22 to Rs 439 crore, according to the company's financial statement filed with the Registrar of Companies (RoC).

As per industry estimates, 500,000 to 750,000 trips take place on bike taxis every week across ride-sharing platforms in Delhi. And, approximately, 70,000-80,000 drivers across platforms use bike taxis every month in Delhi across ridesharing platforms.

“It is too early to assess any impact. However, this will discourage bike taxi business models to grow in the country…Many companies have made significant investments in turning bikes into electric vehicles (EVs). Those investments will become unviable,” said a bike taxi industry player on condition of anonymity.

Uber too in a statement said that an industry-wide dialogue with the government can resolve the issue.

"As the Delhi government contemplates a regulatory framework that will likely allow only electric vehicles (EV) to function as bike taxis, the time is right for deeper industry dialogue," the company said on Friday.

"...Tech platforms need to invest heavily to keep driver earnings on EV bikes at parity with petrol bikes, irrespective of delivery or ridesharing. Thus it is only fair that the timelines for the conversion of the fleet should be the same across sectors," the statement said.

Uber is ready to commit to the same phased electrification mandates including full fleet electrification timelines as suggested for delivery companies, the statement added.

Experts call for dialogue, better public transport system

“Issues like this highlight the need for a better public transport system in India. Bike taxis are not a viable option primarily due to their form factor and it also abstracts patronage from public transport. There are multiple safety concerns in using bike taxis, which are hard to fix,” said Satya Arikutharam, an independent urban mobility expert in Bengaluru.

There are many barriers to operating bike taxis, including major safety concerns for women, Arikutharam added.

“While the motives of various governments may be different, the move to ban bike taxis is in the right direction. From a policy perspective, every state is now moving towards making public transportation better, therefore it is important to focus on that without any distractions like bike taxis which is inherently unsustainable” he said.

Industry sources say that the companies are meeting various mobility experts and government officials to form a consensus on the issue and to open a dialogue.

IAMAI too has urged the government to engage with stakeholders.

“We request that the Government of NCT of Delhi engage with all relevant stakeholders ― industry associations, digital platforms, and affected transportation workers before any coercive action such as the steps mentioned in the public notice are contemplated. An effective public consultation will aid the government in making the right policies for this growing sector,” the industry body wrote in the letter.