Karnataka orders Uber, Ola to end ride-sharing services

31 Jan 2017


The Karnataka transport department has given Uber Technologies Inc and Ola (ANI Technologies Pvt Ltd) till Thursday to withdraw their ride-sharing services in the state after deeming the service illegal.

According to the transport department, the ride-hailing firms have contract carriage permits, which do not allow them to pick up and drop passengers during the course of a trip. Such a permit only allows point-to-point pick-ups and drops. The stage carriage permit, which allows pick-ups and drop-offs along a particular route, can only be accorded to Bangalore Metropolitan Transport Corp and school and college buses.

Following a meeting with Ola and Uber officials, along with drivers affiliated to the firms on Monday, state transport commissioner M K Aiyappa said department has communicated its stance on the legality of the service to the executives and given them three days' time to comply.

''We have explained to them (Ola and Uber) and they have also agreed that what they are doing now is illegal. They will make changes,'' said Aiyappa.

Aiyappa said the department is not averse to the idea of ride sharing, which helps reduce traffic on roads, besides offering lower prices to consumers. Ola and Uber could submit a petition to the transport department stating why ride sharing should be allowed, which will be forwarded to the government for consideration, he added.

The withdrawal of ride sharing is likely to impact the businesses of both firms, given that Bengaluru is one of their top three markets along with Delhi and Mumbai. Of late, both Ola and Uber have been aggressively promoting ride sharing. A Uber spokesperson had earlier said that more than one-fourth of all trips fulfilled by Uber in Bengaluru are shared trips.

When contacted by The Mint, an Uber spokesperson in an email response said, ''We would like to reiterate that UberPOOL is clearly within the law. We will continue to engage with the transport department and Karnataka government as ride-sharing products like uberPOOL are the future of urban mobility, helping decongest cities by getting more people into fewer cars and letting riders move around their city more affordably.''

Ola did not immediately respond to emails seeking comment.

The state transport department had forced shuttle service provider ZipGo to halt operations in Bengaluru in December 2015 on similar grounds.

The regulator said there was no provision in the Karnataka Motor Vehicle Rules of 1989 for services that compete with state-run city buses.

Similarly, bike taxis launched by Ola and Uber were deemed illegal by the Karnataka government. Both companies withdrew the services within a month of launch in March 2016.

Uber and SoftBank-backed Ola have struggled to comply with regulations, which the firms have contended need to be updated to accommodate new-generation products.

States such as Maharashtra and Karnataka, among others, have come up with guidelines to regulate these services after protests by traditional taxi operators.

For instance, the Karnataka government notified the Karnataka On-demand Transportation Technology Aggregator Rules 2016 on 2 April, which, among other things, made it mandatory for ride-hailing services to get a permit before operating in the state. Uber dragged the government to the courts, questioning its authority to frame such rules. Ola got a licence in June.

Uber also objected to some clauses in the Maharashtra City Taxi Rules 2016, released by the state government on 15 October, saying the rules will make operations expensive and hurt the quality of service.

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