In a significant policy overhaul, the Centre allows cab aggregators to charge up to twice the base fare during peak hours, ushering in a new regulatory framework under the Motor Vehicles Aggregator Guidelines 2025. The new norms not only redefine fare structures but also introduce accountability mechanisms for drivers, passengers, and aggregator platforms alike.
These changes are aimed at balancing consumer interests with operational sustainability for ride-hailing companies such as Ola, Uber, and others functioning across India. With a revised fare policy, insurance mandates, licensing requirements, and strict onboarding criteria, the new guidelines are set to reshape the cab-hailing ecosystem.
Fare Restructuring: Dynamic Pricing Gets a Boost
The most headline-grabbing aspect of the new guidelines is the provision where the Centre allows cab aggregators to charge up to 2x the base fare during peak hours, compared to the previous limit of 1.5x. This move is expected to bring transparency to surge pricing and allow cab drivers to recover operational costs more effectively during high-demand periods.
For non-peak hours, however, aggregators must adhere to a more consumer-friendly model. The new rule mandates that fares cannot exceed a minimum of 50% lower than the base fare. This ensures affordable travel options during off-peak times while standardizing the pricing approach.
Base Fare Calculation and Minimum Distance
The Motor Vehicles Aggregator Guidelines 2025 provide clarity on what constitutes the “base fare.” As per the revised rules, the fare notified by the state government for the respective category or class of vehicles will be deemed the base fare. The Centre allows cab aggregators to charge up this base fare with dynamic pricing mechanisms, but only under specified limits.
To accommodate for operational inefficiencies such as “dead mileage” — the distance a vehicle travels without a passenger or while picking up a passenger — the guidelines state that the base fare will be applicable for a minimum distance of three kilometers.
Cancellation Penalties: Accountability for Both Drivers and Passengers
The guidelines also address an ongoing issue faced by consumers: arbitrary cancellations. Under the new system, a penalty of 10% of the total fare, capped at ₹100, shall be imposed on the driver if they cancel a ride without a valid reason identified by the aggregator. Similarly, passengers will also be penalized with the same fee for unjustified cancellations.
This dual accountability system ensures that all parties in the ride-hailing ecosystem behave responsibly and minimizes inconvenience caused by last-minute ride cancellations.
Centralized Licensing via Single-Window Portal
To streamline aggregator operations, the Centre allows cab aggregators to charge up only after securing a license through a centralized online portal. This single-window system is expected to simplify the application process for new and existing cab aggregator platforms.
The licensing fee has been fixed at ₹5 lakh, and once issued, the license will be valid for a period of five years. This regulatory oversight aims to maintain transparency and ensure that only compliant and reliable platforms can operate in India’s ride-hailing sector.
State-Level Implementation within Three Months
The Centre allows cab aggregators to charge up under these new rules but has also recommended state governments adopt the revised guidelines within a three-month window. This coordinated effort ensures uniformity in fare structures and operational guidelines across states, preventing exploitation or confusion among users and service providers.
Insurance Mandates for Driver Welfare
In a welcome move toward driver welfare, the guidelines now mandate aggregators to provide insurance coverage to their driver-partners. Health insurance worth ₹5 lakh and term life insurance of ₹10 lakh must be arranged by the aggregator for every driver onboarded.
This initiative reflects the government’s recognition of the risks associated with gig work and aims to offer some form of social security to a largely informal workforce.
Onboarding Rules and Vehicle Age Limit
Another important regulatory measure is the restriction on the age of vehicles allowed on aggregator platforms. The Centre allows cab aggregators to charge up for services provided by vehicles that are not older than eight years from their initial registration date.
This rule is expected to improve the quality and safety of vehicles on Indian roads, ensuring a better travel experience for passengers and helping aggregators maintain a consistent standard across their fleets.
Grievance Redressal System and Consumer Rights
To make the ride-hailing ecosystem more transparent and user-friendly, the guidelines make it mandatory for all aggregators to appoint a Grievance Officer. This individual will be responsible for addressing complaints from passengers and drivers within a stipulated timeframe, thus ensuring that issues such as fare disputes, driver behavior, or service quality are promptly resolved.
The Centre allows cab aggregators to charge up within regulated pricing bands, but with the expectation that service quality and consumer satisfaction must not be compromised.
Implications for Aggregators and Consumers
With the new dynamic pricing model where the Centre allows cab aggregators to charge up to twice the base fare, aggregators are expected to balance profitability with consumer loyalty. Companies will need to make fare adjustments transparent on their apps and offer detailed billing to avoid user dissatisfaction.
For consumers, the changes mean both higher fares during peak hours and more affordable rates during off-peak times. The structure is designed to encourage off-peak travel while discouraging cancellations, both of which could lead to more efficient resource allocation and better availability of cabs.
Conclusion for Centre Allows Cab Aggregators to Charge Up
The updated Motor Vehicles Aggregator Guidelines 2025 mark a bold step in regulating India’s fast-growing ride-hailing sector. The move where the Centre allows cab aggregators to charge up to 2x during peak hours is aimed at creating a fair and balanced ecosystem that benefits consumers, drivers, and platform operators alike.
With dynamic pricing, clear penalties for cancellations, enhanced driver welfare provisions, and a streamlined licensing framework, these new rules signify a maturing regulatory environment for app-based transport services.
As states prepare to implement these guidelines within the next three months, the coming weeks will be critical in determining how effectively these changes are adopted. For now, it is clear that the Centre allows cab aggregators to charge up—but within a structure designed to protect the interests of all stakeholders in this evolving mobility ecosystem.
