Cab rides in India are poised to become more expensive during busy periods, following the Union government’s decision to allow ride-hailing platforms like Ola, Uber, and Rapido to charge up to twice the base fare during peak hours. This significant change comes as part of the revised Motor Vehicle Aggregator Guidelines (MVAG) 2025 issued by the Ministry of Road Transport and Highways, aiming to bring more flexibility and regulatory clarity to the country’s rapidly growing shared mobility sector.
Under the updated MVAG 2025, cab aggregators can now implement dynamic pricing that allows fares to surge up to 2x the state-notified base fare during peak demand, compared to the previous cap of 1.5x. During non-peak hours, fares can drop to as low as 50% of the base fare, offering some relief to riders during off-peak times. The base fare itself is set by state governments for each vehicle category and must cover a minimum of three kilometers to compensate for “dead mileage” the distance drivers travel without passengers or while picking up riders.
While the central guidelines have been issued, states have been advised to adopt and implement the new rules within three months. This means the actual fare changes will roll out gradually as individual states notify and enforce the updated regulations. States also retain the authority to set the base fare and may impose additional provisions as needed.
Ride-hailing companies have welcomed the move, calling it a “forward-looking step” that brings much-needed predictability and regulatory clarity to the sector. They argue that dynamic pricing is essential to balance supply and demand, especially during high-traffic periods. However, the decision has faced criticism from some political groups who argue that it could burden consumers with higher fares during peak hours.
The MVAG 2025 guidelines also address other aspects of shared mobility, including the legal use of non-transport motorcycles for passenger journeys, with state approval, and enhanced regulatory standards for driver onboarding and passenger safety.