The Centre has announced new guidelines for ride-hailing services like Ola, Uber, Rapido, and inDrive, giving them more freedom to charge higher fares during busy hours while also setting new rules for passenger safety and driver accountability.

According to the revised Motor Vehicle Aggregator Guidelines (MVAG) 2025 issued by the Ministry of Road Transport and Highways on Tuesday, cab aggregators can now charge up to twice the base fare during peak traffic hours. Earlier, they were only allowed to charge 1.5 times the base fare. However, during non-peak hours, fares must not drop below 50% of the base fare.

This is to balance the interests of both consumers and service providers. The ministry said the idea is to prevent steep discounts that hurt competition while also making sure customers are not overcharged during high demand.

Penalty for cancelled rides

The new guidelines introduce penalties for both drivers and passengers who cancel rides without valid reasons.

If a driver cancels a ride after accepting it, a penalty of 10% of the fare (up to ₹100) will be charged. This amount will be shared between the driver and the aggregator. Similarly, if a passenger cancels, the same penalty structure will apply.

Mandatory insurance for drivers

Aggregators must now ensure that all drivers on their platform have health insurance of at least ₹5 lakh and term insurance of ₹10 lakh. This rule has been made compulsory to offer better financial protection for drivers.

Base fare to be fixed by the states

The base fare, which is the minimum rate charged per kilometre, will be notified by individual state governments for various vehicle types, including bike taxis and auto-rickshaws, which are now also covered under these rules.

For example, the base fare is currently around ₹20–₹21 per km in Delhi and Mumbai, and ₹18 per km in Pune. In states where no such fare has been set, the aggregators will have to inform the state government about the base fare they plan to use.

No extra charge for dead mileage

Passengers will not be charged for the distance a cab covers to reach the pickup point, known as dead mileage, unless the ride is less than 3 km away. Fares will be calculated from the pickup point to the drop-off location only.

Improved safety and monitoring

To improve safety, all aggregator vehicles must be equipped with Vehicle Location and Tracking Devices (VLTDs). These devices will send real-time location updates to both the aggregator and the state’s integrated command and control centre.

Training for drivers

All drivers must undergo annual refresher training. Those whose ratings fall in the bottom 5%, based on how long they've been driving with the aggregator, will need to attend training every quarter. If they skip it, they won’t be allowed to drive through the platform anymore.

State governments have been advised to implement the updated rules within three months. They are also free to add more provisions based on local needs.

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