Government Updates Ride-Hailing Guidelines: Higher Surge Pricing, Stricter Driver Rules, and Mandatory Insurance

In a major development for India’s ride-hailing ecosystem, the Ministry of Road Transport and Highways has released revised guidelines for platforms like Uber, Ola, Rapido, and inDrive, allowing them greater flexibility in pricing while introducing new standards for driver conduct, insurance, and passenger safety.

Double Surge Pricing During Peak Hours Now Permitted

One of the most notable changes is the revision in surge pricing regulations. Aggregators are now allowed to charge up to twice the base fare during peak hours, up from the previous limit of 1.5x. During non-peak hours, however, fares must not fall below 50% of the base fare.

This move is aimed at maintaining a balance between affordability for users and operational sustainability for platforms during high-demand periods.

The ministry stated that this policy shift is designed to prevent predatory discounting by aggregators while still ensuring availability of rides during busy hours.

Base Fare Declaration & State Oversight

States have been advised to adopt these revised guidelines within three months, and will retain the authority to notify base fares for various vehicle categories — including taxis, auto-rickshaws, and bike taxis.

In cases where a state has not declared a base fare, aggregators will be required to disclose the fare to the respective state government. For example, the current base fare in Delhi and Mumbai hovers around Rs 20–21 per km, while it is Rs 18 in Pune.

Cancellation Penalty for Drivers and Riders Alike

To reduce last-minute ride cancellations, the new guidelines impose a 10% penalty on the ride fare (capped at Rs 100) for drivers who cancel bookings without valid reasons. This amount will be shared between the driver and the aggregator.

Passengers cancelling rides after confirmation will also be charged a similar fee, discouraging impulsive cancellations that affect overall ride availability.

Mandatory Health and Life Insurance for Drivers

In a pro-worker move, the ministry has mandated insurance coverage for all drivers associated with ride-hailing platforms. Each driver must receive:

• Rs 5 lakh health insurance cover

• Rs 10 lakh term life insurance policy

This provision is aimed at offering financial protection to drivers, who are often gig workers without traditional employment benefits.

No Dead Mileage Charges for Short Pick-ups

The revised rules also clarify the issue of dead mileage—the distance a driver travels before picking up a passenger. Platforms are not allowed to levy dead mileage charges if the pickup location is within 3 km of the driver’s current position. If the distance exceeds that, fares can be applied from the driver’s departure point.

Enhanced Safety Measures and Driver Training

To strengthen passenger safety, all aggregator-affiliated vehicles must be equipped with Vehicle Location and Tracking Devices (VLTDs). These devices must be integrated with both the aggregator’s backend system and state-level command and control centers.

Moreover, service quality is being prioritized through annual refresher training for all drivers. Drivers who fall in the bottom 5 percentile in ratings (relative to their tenure with the aggregator) will be required to undergo quarterly training.

Drivers who fail to attend mandatory training sessions will not be allowed to operate via the aggregator’s platform.

Conclusion

These revised guidelines for ride-hailing platforms mark a significant shift in the regulation of India’s booming app-based transport sector. While they offer greater pricing flexibility for platforms, they also aim to protect commuters and drivers, with new provisions for safety, insurance, and service quality.

With state governments expected to implement these rules soon, both riders and drivers can expect a more structured and reliable experience going forward.

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