Currently, Uber only has drivers with commercial licences on board in India.
Though the company did not share details, sources said the pilot programme will start in the next few months. They added that under this project, the company will have the same safety checks as its regular service.
According to estimates, a major chunk of the rides in the US is peer-to-peer.
"The agreement will create thousands of jobs and entrepreneurship opportunities, foster technical innovation and develop a world-class technological infrastructure in Punjab," Uber said in a statement.
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In the next five years, Uber is expected to provide over 45,000 entrepreneurship opportunities and create over several full-time employment opportunities for the people in the region.
"We are pleased to partner with Uber in Punjab as they commit to the state's economic growth. Punjab has been a leader in embracing technology and innovation and we are excited about the entrepreneurship opportunities peer-to-peer ride-sharing will create for people in the state," Punjab Deputy Chief Minister Sukhbir Singh Badal said.
"We are incredibly excited to enter into this agreement with the government of Punjab which will help both consumers and the state reap the benefits of ride-sharing and the growing on-demand, digital economy," Uber India President Amit Jain said.
Uber, which was in the midst of controversy over alleged misbehaviour of one of its driver partners in the country, has a base of over 185,000 driver partners in the country.
It's present in 22 cities in India, the highest in any country outside the US.