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Representation to Karnataka Government to review the notification of new taxi-fare structure
Representation to Karnataka Government to review the notification of new taxi-fare structure

February 29, 2024

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We have written to the Government of Karnataka, to review the newly notified cab-fares in Karnataka.

On February 3, 2024, Department of Transportation, Government of Karnataka, revised the fare structure applicable on taxis (both mobile application (app)-based and non-app-based city taxis). A welcome change is the progress in the minimum fares applicable for rides up to 4kms. This is expected to solve for the low-preference of drivers to accept short-distance rides.

Concerns with the revised fares:

  1. Dynamic pricing is not allowed: Earlier, a range of per-km 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.
  2. 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, the new fare structure mandates the same fare for app-based and non-app-based taxis, thereby, 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/commission within the fare brackets, is also not possible anymore.

 

Our suggestions to the Government of Karnataka include that:

  1. 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.
  2. In case the decision on point number 1 above is likely to take time, then as an immediate measure, it should be clarified that given the value addition offered by app-based taxi aggregators, a commission/service fees can be charged by such aggregators in addition to the notified fares.

 

We continue to engage with the industry on this topic. For more information, kindly write to garima@nasscom.in.


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Garima Prakash
Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech

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