Uber says autorickshaw service 'under cloud' in Bengaluru, blames price cap

Aggregators operating in city after High Court stays a state government ban on them providing autos

The business of commuters booking autorickshaws via apps is "under a cloud" in Bengaluru, said Uber on Thursday as it warned it could limit its service in the city if a tussle with the state government persists.

Uber and other companies are operating in Bengaluru under a stay order granted by the Karnataka High Court after the government banned aggregators from running autorickshaws, or autos.

More than 10 lakh Bengaluru residents use Uber Auto monthly; some 50,000 drivers supplement earnings by taking bookings on the company’s app.

Uber said its service allows customers doorstep pickups and is popular for that reason. “Despite these benefits, the future of the e-hail auto sector in Bengaluru is under a cloud,” said Nitish Bhushan, head of central operations, Uber India & South Asia, in an interview. “Drivers need to be compensated for the additional distance they travel and time they spend on providing these doorstep pickups. Not compensating drivers for pickups will lead to poor consumer experience and take us back to pre-ridesharing times.”

Uber’s commission in Bengaluru is capped at 10 per cent of the fare collected. For example, the minimum fare for the first two kilometres is Rs 30, which comes to around Rs 35 after adding 10 per cent commission and 5 per cent GST (goods and services tax).

“This is not financially sustainable,” said Bhushan. “If our costs cannot be covered through commissions, we will have to find ways to offload costs that could impact the experience of drivers and riders.”

In the face of these commission caps, Uber said it may have to limit the autorickshaw service to select parts of Bengaluru. The firm said that the current fixed metered fare does not adequately compensate drivers for the additional distance traveled and time spent in picking up a passenger from their doorstep. Over time, this will result in fewer autos for e-hailing.

“Since removing the doorstep compensation, Uber said the cancellations have increased by over 50 per cent in the city, as availability reduces and drivers turn down trips that are not economically viable for them,” said Bhushan.

He said platforms like Uber provide services that enhance safety, convenience and digitization. Uber Auto provides services like GPS tracking, a safety helpline, 24×7 phone-call and in-person support, rider and driver on-trip insurance, and law enforcement response assistance. Street hailed autos don’t come with any of these features. Platforms incur significant costs to provide these value-added services.

The Karnataka High Court last month asked the state government to meet cab aggregators Ola and Uber to reach an understanding on the fare charge for autorickshaw services through apps. It issued the direction related to the petitions by ANI Technologies (owner of Ola) and Uber. Ola and Uber moved the court challenging an order issued by the State Transport Department effectively banning auto-rickshaw rides through the companies' apps. The government declared such services illegal following multiple complaints of overcharging.

The High Court gave 15 days to government regulators and cab aggregators to work out a fare pricing mechanism. The High Court said in the interim, while the transport department comes back with the fare pricing mechanism, the companies can charge 10 per cent of the base fare.

Bhushan said the 25 per cent commission on top of the base fare is the minimum needed for a viable business model. A meeting called by the transport department on Saturday didn’t reach any consensus.

“We have submitted a proposal with a very detailed rationale, both on why we feel that drivers should get compensated for the additional pickup distance and why we believe 25 per cent is the right commission for providing the services and making the business model viable,” said Bhushan. “We have engaged very deeply with the transport department and are awaiting the next steps from them.”