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[BANGALORE] India is set to clear the ride-hailing services of Uber Technologies Inc and Ola by issuing guidelines to make them legal, according to a person with knowledge of the matter.
The companies will need to get the software used to calculate fares validated while keeping their luxury car category outside tariff rules, the person said, asking to not be identified as discussions are private.
A court affidavit could be be filed in Delhi as soon as this week to provide consistent regulations for startups and traditional taxi operators, the person said.
Ride-hailing has exploded in popularity and turned the traditional taxi industry upside down as regulators scramble to develop a framework for operators.
India, alongside China and the US, comprise the world's three largest markets for such startups as Uber and Ola pour hundreds of millions of dollars into the country with the backing of investors such as Alibaba Group Holding Ltd, SoftBank Group Corp and Tiger Global Management.
With a lack of clear national rules, ride-hailing companies have had vehicles seized and drivers fined even as their services fanned out to more than 100 cities. In India, traditional cab companies and taxi unions have stepped up strikes and protests against cab aggregators and their cut-throat fares.
The government wants market dynamics to dictate fares for the luxury category of Uber and ANI Technologies Pvt's Ola rather than have them governed by the tariff regime of state governments, the person said. The government's affidavit has to be filed by mid-December.
The Ministry of Road Transport & Highways confirmed next month's deadline and said its policy will be citizen-centric while declining to comment on specifics for the ride-hailing companies. Ola and Uber declined to comment.
While the impending policy doesn't address surge pricing specifically, getting fare calculators verified by the government would provide an indirect way to curb the practice of charging multiples of normal fares during peak times, the person said.
The proposed rules don't address discounting, which has been a source of tension between Ola and San Francisco-based Uber, the person said.
Regional governments have already spelled out rules for their jurisdictions. Karnataka, where Bangalore is the capital, has stipulated that cabs must have in-car panic buttons, digital invoice printers and 'Taxi' signage atop the cars. Uber has called the regional rules 'regressive'.
The new federal policy doesn't spell out any requirements for physical meters or taxi signage, the person said.
In July, China defined its policy for cab aggregators. Within days Uber and market leader Didi Chuxing announced a deal to combine their operations in the country.