New Ola, Uber Guidelines: Peak Pricing Up, Cancellations Penalized

In a move aimed at regulating the operations of cab aggregators like Ola and Uber, the Ministry of Road Transport and Highways has announced the Motor Vehicle Aggregator Guidelines (MVAG) 2025. These revised norms bring major changes in fare regulation, cancellation penalties, and passenger safety.

According to the new rules, dynamic pricing during peak hours can now go up to twice the base fare, compared to the earlier cap of 1.5 times. During non-peak hours, aggregators may charge at least 50% of the base fare, ensuring pricing flexibility based on demand.

The base fare shall be determined by the respective state governments and will be applicable for the first 3 kilometres, accounting for fuel and pickup travel (dead mileage). Importantly, no passenger shall be charged for dead mileage unless the pickup distance is less than 3 km.

The government has also introduced penalties for unjustified ride cancellations. A fine of up to ₹100 or 10% of the fare will be imposed on:

• Drivers who cancel rides without a valid reason.

• Passengers who do the same.

This rule aims to address long-standing consumer complaints about last-minute cancellations.

To enhance passenger safety, the guidelines mandate a minimum insurance coverage of ₹5 lakh for passengers. Aggregators must ensure this policy is in place before operating in any region.

State governments have been given a 3-month window to adopt and implement these updated guidelines. They may also introduce additional conditions to suit local transportation needs.

The guidelines are part of the government’s broader effort to balance consumer rights, driver accountability, and aggregator profitability, while promoting transparency in the sector.

With these rules, the government hopes to establish a standardised operational framework for ride-hailing services across India. This comes at a time when urban mobility is becoming increasingly reliant on aggregator platforms.

Industry experts believe that while dynamic pricing may raise costs for consumers during peak hours, the penalties and insurance provisions will improve overall user experience. Ola and Uber are expected to update their app algorithms to reflect these new changes.