Cab fare hike alert: Ola, Uber allowed to charge double under new govt rules

New ride-hailing guidelines in India permit cab aggregators to double base fares during peak hours, while ensuring fares don't drop below 50% during off-peak times.

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Commuters, take note! Your Ola or Uber rides during rush hour will soon cost more, but there’s a larger plan at work. The Central government has rolled out new guidelines that allow cab aggregators like Uber, Ola, and Rapido to charge up to twice the base fare during peak hours.

The government has also ensured that passengers are not overcharged in quiet hours either, during non-peak times, fares cannot drop below 50% of the standard rate. These changes come under the new Motor Vehicle Aggregator Guidelines (MVAG) 2025, which aim to bring fairness and accountability to India’s fast-growing ride-hailing market.

Why it matters

For many, these app-based taxis and bike rides are more than just a convenience. They are lifelines for daily commutes. But as urban congestion grows and costs rise, the need for clear, fair pricing has become critical.

It's also a win for drivers, many of whom often face income uncertainty. Now, if a driver cancels a ride without valid reason, they'll be penalised with 10% of the fare, up to Rs 100—but they also get something in return. The rules now require companies to provide health insurance worth Rs 5 lakh and term insurance of Rs 10 lakh to every driver. That's a big safety net for gig workers who form the backbone of urban transport.

States will set final price rules

The Centre has advised state governments to adopt these guidelines within the next three months, and it will ultimately be up to them to decide the actual pricing and driver commission models. If a state hasn't yet fixed fares, aggregators must declare their own base fare clearly.

One more thing for passengers to note: "dead mileage" charges—what you pay for the distance a driver travels to reach you—won't apply unless your pickup point is over 3 km away. This aims to cut unnecessary fare inflation and make short-distance rides fairer.

Good news for bike taxis too

The announcement is also being seen as a relief for bike taxi services, like Rapido, which have long operated in regulatory limbo. In states like Karnataka, where bans on bike taxis caused major disruptions and protests, these clear-cut rules could allow smoother operations going forward.

Industry welcomes the move

Companies like Uber have praised the move, calling it "forward-looking" and essential for building trust among users, drivers, and governments.

"Timely adoption by states will be key to ensuring smooth and uniform implementation," Uber said in a statement. "We appreciate the Ministry's balanced and consultative approach."