Nasscom urges Karnataka govt to review the uniform taxi fare rules

Nasscom, the apex body for the $245 billion technology industry in India, has written to the Government of Karnataka, to review the newly notified cab fares in the state.

Nasscom on its website said that the concerns with the revised include dynamic pricing not being allowed. Earlier, a range of per-kilometre fare was in place. This allowed app-based taxi aggregators to deploy dynamic pricing, with guardrails, i.e., within the permitted range of fares. With the latest notification, this is no longer possible because of the mandatory flat fares.

“The practice of allowing dynamic pricing in the fares charged by app-based taxis should be restored, along with the previously provided guardrails in terms of a range of fare,” Nasscom suggested to the government.

In case the decision on this is likely to take time, then Nasscom asked for an immediate measure. The IT body suggested that it should be clarified that given the value addition offered by app-based taxi aggregators, commission or service fees can be charged by such aggregators in addition to the notified fares.

The other concern that Nasscom raised includes the value proposition of app-based taxi aggregators and the need to charge a commission has not been recognised. Earlier, the fare structure for app-based taxis and non-app-based city taxis was different. The higher fare for app-based taxis considered the added value (such as, route-tracking, ride-sharing feature, customer care services) offered by app-based taxi services and taxis hailed on the street. However, Nasscom said the new fare structure mandates the same fare for app-based and non-app-based taxis. This is making it tougher to offer and improve value-added services. Further, given the flat fares, the earlier practice of app-based taxi aggregators to cover the service fee or commission within the fare brackets, is also not possible anymore.

On February 3, 2024, the Department of Transportation, Government of Karnataka, revised the fare structure applicable to taxis (both mobile application (app)-based and non-app-based city taxis).

The surprise introduction of flat fares, with no room for dynamic pricing, will have a chilling impact on Karnataka’s mobility ecosystem, according to a letter sent by The Internet and Mobile Association of India (IAMAI) to Ramalinga Reddy, Minister of Transport, Government of Karnataka. The letter was sent in response to the recent notification on taxi fares issued by the Karnataka Transport Department on February 3, 2024.