Centre revises aggregator guidelines, allowing higher ride fares during peak hours
Passengers using app-based ride services like Ola, Uber and Rapido may face higher fares during peak hours under the newly revised Motor Vehicle Aggregator Guidelines (MVAG) 2025, announced by the Ministry of Road Transport and Highways on July 1. The updated rules now permit ride aggregators to charge up to twice the base fare during busy hours, compared to the earlier cap of 1.5 times. Conversely, fares during non-peak hours cannot be lower than 50% of the base fare.
The decision comes amid rising concerns over increased travel costs, especially in states enforcing strict measures such as fuel bans on older vehicles to address environmental concerns. While aimed at providing greater flexibility to aggregators, the fare revisions are expected to place additional financial pressure on commuters.
The guidelines also introduce stricter accountability for drivers. Cancellations without valid reasons will attract penalties amounting to 10% of the fare, capped at Rs. 100. In addition, the guidelines specify that dead mileage charges, the fare covering the distance a driver travels to pick up a passenger, will not apply if the pick-up location is within three kilometres.
The Centre has recommended that states adopt the revised guidelines within three months. State governments will also play a key role in determining fare structures and deciding the share of revenue and incentives for drivers. If states fail to notify fare structures, companies will be required to declare their own base rates.
A notable aspect of the guidelines is the mandatory provision for driver welfare, including a minimum health insurance coverage of Rs. 5 lakh and term insurance of Rs. 10 lakh for drivers operating on aggregator platforms.
The move also provides regulatory clarity for bike taxi operators, including Rapido and Uber’s two-wheeler services, which have faced legal uncertainties in several states. Recent bans, such as the one in Karnataka, had led to protests from bike taxi operators and gig workers.
Major industry players have largely welcomed the revised framework. Uber called the updated guidelines “a progressive step” that could support innovation, regulatory clarity, and broader access to affordable transportation. The company emphasised that timely adoption by states would be crucial for ensuring consistent implementation and building predictability for drivers and passengers alike.
While the new regulations aim to formalise the aggregator sector and improve driver welfare, passengers should brace for increased fares during high-demand periods as part of the evolving landscape of app-based mobility in India.
