Ola, Uber, Rapido rides set to get expensive during peak hours as Centre revises rules

The revised Motor Vehicle Aggregator Guidelines (MVAG) 2025 was issued by the ministry of road transport and highways on July 1

The Central government has allowed cab aggregators such as Uber, Ola, Rapido and others to charge passengers as much as twice the base fare during peak hours under its revised guidelines. Moreover, the fares during the non-rush hours could not be less than 50 percent of the base rates. Earlier, these ride hailing firms could charge up to 1.5 times during peak hours of travel.

The move is likely to hike the cost of travel at a time when some states are enforcing a strict fuel ban on old vehicles, adding to anxiety over growing cost pressures.

The revised guidelines Motor Vehicle Aggregator Guidelines (MVAG) 2025, issued by the ministry of road transport and highways, also said that drivers will be penalised 10 percent of the fare not exceeding more than Rs 100 if the ride is cancelled without any specific reason.

In addition, state governments have been advised to adopt the new guidelines in the next three months as they will be responsible for fixing the fares chargeable by the ride aggregators. Additionally, the proportion of share of fare and incentives for the drivers will be based on state government’s recommendations.

In case the fare has not been notified by the states, the companies are required to declare their base rates.

The rules also clarify that the dead mileage charges will not be applied unless the pick-up distance is less than 3 km. A dead mileage charge is the fare for the distance a driver travels to pick up the passenger.

The guidelines also mandate the companies to ensure a health insurance of at least Rs 5 lakh for the drivers and a term insurance of at least Rs 10 lakh.

However, this move brings relief to bike taxi operators like Rapido and Uber, who have long operated in a legal grey area, especially in states like Karnataka, where a recent ban on bike taxis had led to increased tensions and widespread protests.

Major industry players, including Uber and Rapido, have welcomed the move, acknowledging its potential to drive innovation, expand affordable mobility, and create new livelihood opportunities.

Uber lauded the guidelines as a "forward-looking step toward fostering innovation and regulatory clarity." "Timely adoption by states will be key to ensuring uniform implementation and building much-needed predictability for all stakeholders. We commend the Ministry for its consultative and balanced approach, and remain committed to working closely with governments at all levels to support effective and inclusive rollout of the framework," an Uber spokesperson said.

With PTI inputs