Now, West Bengal plans to curb surge pricing

West Bengal is following in the footsteps of Karnataka and Delhi to introduce rules to regulate taxi aggregators such as Uber and Ola in an attempt to curb surge pricing.

The rule, if passed, will disallow Uber and Ola from charging a fare higher than the limit prescribed by the state. While West Bengal currently has a fare structure to regulate prices of yellow taxis, buses and other modes of public transport, it does not have a similar rule for taxi aggregators.

“We are thinking of controlling the fare and surge pricing cannot go on,” the state’s transport minister, Suvendu Adhikari, told Business Standard. “We’ll go through the [Delhi High Court’s] order thoroughly and hold consultations with various departments, analyse public opinion and then formulate a policy to check surged pricing.”

A recent order by the Delhi High Court placed curbs on cab aggregators charging higher fare.

Uber and Ola say the surge pricing mechanism is not used to boost their earnings. Instead, they say it helps attract drivers to an area where there is shortage of cabs with the lure of being able to earn more than the regular fare.

Both companies have tried to work around the ban on surge pricing, with Uber inventing upfront pricing, which shows customers the cost of a ride before they book it, and Ola introducing low-peak pricing that restricts surge to a maximum of the state prescribed fares.

Both companies have fares starting at Rs 6 per kilometer, giving them enough leeway to increase prices to nearly three times that.

“We have received complaints about surge pricing and will control it. Although things are at a deliberative stage, the state government will soon curb it,” a state official said.

Uber, which has around 10,000 drivers in Kolkata, has already introduced upfront pricing in the city, but transport officials suspect the feature veils surge pricing and doesn’t offer transparency.

The state government has proposed that taxi aggregators not only install physical panic buttons but also closed circuit cameras in every cab. Uber has begun facing resistance in its growth as the state transport department has begun slowing the pace at which it offers commercial licenses because the firm has not followed the rules.

“There are certain challenges that have been identified in implementing CCTV requirements with respect to rider privacy, streaming of the video and potential for misuse during storage of said footage,” an Uber spokesperson said.

Ola, which operates under provisional license, however, has gained the transport department’s favour.

The transport department official said Ola applied for 50 permanent licenses after adhering to the conditions.

Ola and Uber are increasingly facing resistance from states seeking to curb surge pricing under the pretext of protecting consumer rights. Uber has moved the high courts in Karnataka and Delhi, arguing that states do not have the right to regulate them.

The Karnataka High Court has reserved its judgment on a plea by Uber calling the state government’s move to regulate cab aggregators as unconstitutional.