Motor vehicle aggregator guidelines cap surge pricing, penalise cancellation by drivers, riders

Also Read: Relief for Rapido, other bike taxi operators as Centre’s aggregator guidelines 2025 permit shared mobility; states to take final call

Aggregators cheer move

"We welcome MVAG 2025 as a forward-looking step for fostering innovation and regulatory clarity in India’s digital mobility sector. Timely adoption by states will be key to ensuring uniform implementation and building the much-needed predictability for all stakeholders,” an Uber spokesperson told Moneycontrol.

"We welcome Clause 23 of MVAG 2025, which permits the aggregation of non-transport motorcycles for passenger journeys,” said a Rapido spokesperson.

Bike taxis get formal recognition

For the first time, the Centre has recognised and allowed the aggregation of non-transport motorcycles for passenger use, provided state governments are not against it.

This offers a long-awaited legal clarity to services like Rapido, which have operated in regulatory limbo in several states.

Bike-taxi operators believe MVAG 2025 will be a shot in the arm to the service in states like Karnataka, where they face regulatory challenges.

However, states like Karnataka are reportedly reluctant to frame bike-taxi rules due to pressure from auto and taxi unions.

“By recognising non-transport motorcycles as a means of shared mobility, the government has opened the door to more affordable transportation options for millions, especially in underserved and hyperlocal areas….Aligned with India’s goals of sustainable urban development, the move will also help address pressing challenges such as traffic congestion and vehicular pollution,” said a Rapido spokesperson.

Cap on surge pricing, minimum base fare rules

Among other guidelines is a cap on surge pricing.

Aggregators will now be permitted to charge a maximum of twice the base fare, and a minimum of 50 percent of it, bringing in the much-needed price predictability for passengers.

The base fare itself will be determined by state governments. Where a state hasn’t fixed a fare yet, aggregators will be required to notify the government of their base fare and follow it until official guidelines are issued.

This is for  the first time that the Centre is drawing a hard boundary around dynamic pricing, a feature that has long angered consumers during peak hours or rain-soaked city commutes.

Cancellation comes at a cost, for both sides

The new guidelines, just like the one in 2020, highlights penalties for cancellations by either party.

If a driver or rider cancels a trip without valid reason, a fine of 10 percent of the fare, capped at Rs 100, can be imposed.

Aggregators are now expected to clearly list what qualifies as a valid reason on their app and website, a move aimed at bringing accountability to a grey area that frequently sparks complaints from users and drivers alike.

Fare split

Drivers must get 60 percent even if the vehicle is owned by the aggregator.

In what could be the most consequential change for gig workers, the government has mandated that drivers receive at least 80 percent of the fare, including toll and parking charges, if the vehicle is not owned by the aggregator.

MVAG 2025 specifies that if the vehicle is owned by the aggregator, the driver’s share must be no less than 60 percent. The fare settlement must happen daily, weekly or fortnightly, at the latest.

This provision addresses long-standing grievances among gig workers over the disproportionate share retained by aggregator platforms in the name of commissions, marketing costs or app maintenance.

Insurance for passengers, psychological tests for drivers

The new guidelines extend protection not just to drivers, but also to passengers.

For passengers, a mandatory insurance cover of Rs 5 lakh must be ensured for each trip, adding a layer of safety to India's fast-growing but loosely regulated shared mobility sector.

Apart from this, aggregators must now provide health insurance worth Rs 5 lakh and term insurance of Rs 10 lakh for each on-boarded driver.

The bar for onboarding drivers has also been raised.

In addition to police verification, medical checkups and proof of experience, drivers must now undergo a psychological assessment before being allowed to operate on an aggregator’s platform.

Drivers rated in the bottom 5 percentile in user feedback will be required to undergo quarterly refresher training or face offboarding.

Push for EVs, inclusion of Divyangjan-friendly vehicles

While the 2020 guidelines  said that states should permit electric vehicles (EVs) and vehicles running on Ethanol or Methanol, which are exempted from permit requirements, the new guidelines elaborate more.

The Centre has empowered state governments to mandate annual targets for EV adoption in aggregator fleets.

The guidelines also call for the inclusion of vehicles that cater to Divyangjan (persons with disabilities), making accessibility a priority for mobility platforms. This comes as India doubles down on its EV push and prepares for more inclusive urban transport infrastructure.

Compliance leash tightened 

Aggregators can now face licence suspension for up to three months, followed by cancellation for repeat offences.

Fines ranging from Rs 1 lakh to Rs 1 crore can be levied, depending on the severity of violations, including overcharging, failure to ensure driver safety, or for not honouring contractual obligations.

A centralised portal will be created for all licence applications, deposits, and renewals, offering a single-window system for aggregator compliance, streamlining what was earlier a state-led process.