Motor Vehicle Aggregator Guidelines 2025 introduce key changes on dynamic fares, cancellation charges, and mandatory ₹5 lakh passenger insurance
July-2, 2025: In a significant update aimed at regulating app-based cab services, the Ministry of Road Transport and Highways has introduced the Motor Vehicle Aggregator Guidelines (MVAG) 2025, revising rules related to peak-hour pricing, cancellations, and passenger safety. States have been advised to adopt the new guidelines within three months.
🔺 Surge Pricing Doubled During Peak Hours
Under the new rules, Ola, Uber, and other ride-hailing platforms will be allowed to charge up to twice the base fare during peak hours, up from the previous limit of 1.5x.
Conversely, fares can be discounted by up to 50% during non-rush hours. The “base fare” will be decided by state governments based on vehicle categories, and will apply for a minimum distance of three kilometres to cover dead mileage.
🚫 Cancellation Penalties for Drivers and Passengers
To curb unnecessary cancellations, the new guidelines introduce financial penalties for both parties:
- If a driver cancels a ride without a valid reason, 10% of the fare (up to ₹100) will be deducted.
- A similar penalty applies to passengers who cancel rides without justification.
This aims to reduce trip disruptions and encourage accountability on both ends.
🛡️ Mandatory ₹5 Lakh Insurance for Passengers
The revised guidelines make it mandatory for aggregators to provide minimum ₹5 lakh insurance cover for every passenger, reinforcing rider safety.
🔍 Other Key Points
- Dead mileage (distance without passenger) is not chargeable if ride exceeds 3 km.
- Fares are only applicable from pickup to drop-off, ensuring fair billing.
- States may add additional provisions to suit local conditions and priorities.
With ride-hailing apps deeply integrated into urban transport ecosystems, these revisions in MVAG 2025 aim to strike a balance between passenger convenience, fair pricing, and aggregator accountability. However, implementation effectiveness will depend on state-level adoption and enforcement in the coming months.
Tags:
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