Govt Revises Rules for Ola, Uber: Surge Fare Hiked, Cancellation Penalties Introduced
Cab Fares Likely To Rise As Drivers Plan Uber App Boycott In Pune, Mumbai And Nagpur
New Motor Vehicle Aggregator Guidelines 2025 set two-fold peak pricing limit, Rs 100 cancellation penalty cap, and mandate passenger insurance
The Ministry of Road Transport and Highways has issued revised Motor Vehicle Aggregator Guidelines (MVAG) 2025, allowing cab aggregators like Ola and Uber to charge up to twice the base fare during peak hours, up from the previous 1.5x cap. The new guidelines also introduce penalties for ride cancellations and mandate insurance cover of ₹5 lakh for passengers.
Key Highlights:
Dynamic Pricing Update:
Aggregators can now charge up to 2x the base fare during peak hours. During non-peak hours, they are permitted to offer fares at a minimum of 50% less than the state-notified base fare.
Cancellation Penalties:
If a driver cancels a ride without valid reason, a 10% penalty on the fare (capped at ₹100) will apply.
The same penalty applies to passengers cancelling rides without justification.
Base Fare and Dead Mileage:
The base fare must cover a minimum of 3 kilometers, accounting for dead mileage (the distance travelled without a passenger).
However, passengers won’t be charged separately for dead mileage unless the pick-up point is within 3 km of the driver’s location.
Passenger Insurance Mandate:
Aggregators must provide a minimum of ₹5 lakh insurance for every passenger for safety and liability protection.
State Adoption Timeline:
All state governments have been advised to adopt the new rules within three months, with flexibility to include additional provisions tailored to local conditions.
The Ministry said the updated rules are a refined version of the 2020 guidelines, aiming for a “light-touch” regulatory environment that balances consumer safety, fair pricing, and driver welfare.
The move comes amid rising complaints about arbitrary pricing, driver no-shows, and passenger safety concerns. By standardizing fare rules and introducing accountability for cancellations, the government hopes to bring greater transparency and reliability to the ride-hailing ecosystem.
