Govt. Ups Cab Surge Pricing Cap: Ola, Uber Can Charge Double The Base Fare During Peak Hours

The government has revised pricing regulations for ride-hailing platforms, permitting cab operators like Ola and Uber to implement higher surge charges during busy periods while introducing new cancellation penalties for both drivers and passengers, says a report by NDTV.

New Fare Structure

Under the updated Motor Vehicle Aggregator Guidelines (MVAG) 2025 released by the Ministry of Road Transport and Highways on Tuesday, cab aggregators can now charge up to double the standard rate during peak demand periods, which is an increase from the previous 1.5x limit. 

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During off-peak hours, cab operators must offer rides at minimum 50 per cent below the base fare.

The ministry outlined that state governments will establish base fares for different vehicle categories, which will serve as the foundation for pricing calculations. 

"The fare by the State Government for the respective category or class of motor vehicles, shall be the base fare chargeable to passengers availing services from the aggregator," the guidelines specify under section 17.1.

Cancellation Penalties For Both Drivers And Passengers

The new regulations introduce penalties for ride cancellations without valid reasons. Both drivers and passengers will face a penalty equivalent to 10 per cent of the fare, with a maximum cap of Rs 100, when they cancel bookings without providing adequate justification.

Three-Kilometre Minimum Fare Policy

The updated guidelines establish a three-kilometre minimum fare structure designed to compensate drivers for non-revenue generating travel. 

"The base fare chargeable shall be for a minimum of three (3) kilometres to compensate for dead mileage including the distance travelled without a passenger and the distance travelled and fuel used for picking up the passenger(s)," the ministry stated.

However, passengers will not be charged for dead mileage except when their actual journey distance falls below three kilometres. The fare calculation will only include the distance from pickup to drop-off location.

Revised Insurance Requirements

The revised guidelines mandate that aggregators maintain minimum passenger insurance coverage of Rs 5 lakh. State governments have been given a three-month implementation window from the guideline release date, with flexibility to add supplementary provisions beyond the specified requirements.

Dynamic Pricing Framework

The new pricing structure grants aggregators significant operational flexibility. 

"The aggregator shall be permitted to charge a minimum of 50 per cent lower than the base fare and a maximum dynamic pricing of two times the base fare specified under sub-clause (17.1) above," the ministry confirmed.