Who pays for cancelled rides? Maharashtra's new cab rules stir industry debate

Mint

06-05-2025

Maharashtra's new policy for cab aggregators has raised concerns across the ride-hailing ecosystem, particularly over a provision for penalties if a driver cancels a booking.
While the policy introduces a penalty of
₹
100 or 10% of the fare (whichever is lower) to be credited to the rider, it is unclear whether the cost will be borne by the driver or the cab aggregator.
In addition to cancellation charges, two other provisions are also expected to spark further debate: the introduction of mandatory meter pricing and a surge pricing cap of 1.5 times the base fare, which could limit driver incentives during high-demand periods such as festivals, peak hours, or adverse weather conditions.
The Maharashtra government officially rolled out the Aggregator Cabs Policy 2025 on 1 May, aiming to regulate app-based cab services. The policy was developed following Supreme Court directives urging states to regulate the sector. The rules are expected to be notified later this week, Maharashtra's state officials said.
Here's an overview of the provisions that have raised concern among industry players.
Industry executives from the ride-hailing industry told Mint that the policy imposes an undue compliance burden on platforms that act purely as intermediaries. Since aggregators do not own vehicle fleets, they argue they lack the control necessary to manage driver behaviour around cancellations.
'Usually, it's the driver cancelling the ride—the platform has no incentive to do that. Aggregators don't own vehicles, so they cannot enforce the kind of control fleet operators can," said an executive from the industry close to the matter.
Driver-led unions have also raised concerns that the cancellation clause could shift the financial burden onto drivers.
'Cancellation will likely get pushed onto drivers, further making it difficult for them to sustain their livelihood," said Shaik Salauddin, national general secretary of the Indian Federation of App-Based Transport Workers (IFAT).
However, some experts said the policy introduces accountability and may be a step toward greater professionalism in the sector.
'These penalties are expected to go to the aggregators that should further pass on to the drivers, leading to more professionalism in the game. The ultimate beneficiary of this discipline-based structure is going to be the end consumer, which is a welcome move by the government," said Amit Kaushik, managing director at Urban Science, an automotive consultancy firm.
Still, concerns persist about implementation. Executives noted that drivers often reject rides informally, forcing users to cancel their trip.
'Drivers can game the system—delay pickups until the customer cancels, for instance. And if I'm a driver facing cancellation penalties, I'd rather switch to a platform that doesn't charge me," said an executive representing the companies, speaking on condition of anonymity.
'Even models like Namma Yatri and Sahakar Taxi should fall under the same compliance lens. You can't regulate one segment while letting others operate freely," they added.
While
Mint's
queries to Uber and Ola did not elicit a response, Rapido said it may remain partly unscathed.
Rapido functions as a software-as-a-service (SaaS) provider, charging drivers a one-time subscription fee and taking no commission from fares. As a result, it considers itself a technology provider, not a traditional aggregator.
It operates on a model where no commissions are charged from drivers, and 100% of the fare goes directly to the driver's account, 'with no intervention or settlement on the platform," a company spokesperson said.
Instead, it charges drivers a one-time software subscription fee, addressing the 'dissatisfaction with high commissions charged by other platforms," the company said.
'This is akin to digitisation of offline negotiation as to an app based negotiation," the company clarified, adding that, "we don't face the problem of ride cancellation from the drivers on Rapido." The model mirrors those of other platforms such as Namma Yatri and inDrive, which also bypass the conventional aggregator structure.
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Industry executives fear that despite the central government's Motor Vehicle Aggregators Guidelines, 2020, state-specific regulations will require aggregators to constantly adjust their software, resulting in a compliance nightmare and increased costs.
'Jurisdictionally, it will be a software nightmare. Each state-specific tweak increases the cost of compliance, which eventually makes the business model unviable. Compliance shouldn't increase to an extent where business models begin to look like charity," said an executive from the ride-hailing industry.
Industry players also pointed out that the current regulatory environment may incentivise both drivers and platforms to shift toward Saas-based formats, which are largely exempt from such regulation.
'You now have models like Namma Yatri, Sahakar Taxi, and Rapido. If these continue to grow, drivers will naturally be drawn to them. The question is: Are we unintentionally pushing all aggregators to adopt this format just to avoid compliance?" said another industry official.
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The provision on surge cap of 1.5 times the base fare which could curb pricing flexibility during high-demand periods is also likely to backfire, experts said.
'Surge isn't just about profits—it's also how you incentivize drivers to respond to demand spikes. If the government itself uses surge pricing in other services, clearly the model has merit," said another executive, representing the companies, speaking on condition of anonymity.
Surge pricing, also known as dynamic fare pricing, is implemented by the state-owned Indian Railway Catering and Tourism Corporation (IRCTC) for train tickets during peak times. In regulated industries like airlines, this pricing strategy helps manage demand and optimize service availability.
The mandatory meter pricing may not be a feasible model, industry executives said, noting that customers switched to alternative platforms in the first place because traditional models were unreliable.
'Customers jumped to these platforms for two reasons: easier access to cabs and more predictable pricing. While meters are intended to make fares transparent, the lack of other technological innovations (like app-based fare estimates) still leaves consumers with an uncomfortable feeling of fare unpredictability and service availability," said an executive from the ride-hailing industry.
Maharashtra state officials maintained that this policy is essential to ensure fare transparency and curb exploitation of riders. They emphasised that these new rules aim to strike a balance between consumer protection and driver welfare, improving service reliability and safety in Maharashtra's fast-growing urban mobility sector.
As of now, there is no publicly announced formal feedback window for stakeholders or the public to submit comments on the policy. However, the state transport department has indicated that operational guidelines are being finalised and will be communicated to all stakeholders soon.
While Maharashtra's new policy attempts to bring greater accountability and protect consumer interests, the execution will be closely watched, particularly for its impact on driver earnings, platform viability, and the broader future of app-based mobility in India.
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