The central government has unveiled a long-awaited regulatory framework that allows state governments to authorise private motorcycles for use as bike taxis via aggregators such as Rapido, Ola, and Uber.
While this is not an automatic go-ahead for services to resume, it marks a significant policy shift and opens a formal route to legalisation—provided states choose to act.
The Ministry of Road Transport and Highways (MoRTH) issued the new guidelines on July 1, enabling states to permit the use of non-transport (privately registered) two-wheelers for passenger rides through licensed platforms.
“The state government may allow aggregation of non-transport motorcycles for journeys by passengers as shared mobility through aggregators,” the ministry said. This move, it added, is aimed at easing traffic congestion and vehicular pollution, while also offering affordable mobility, boosting hyperlocal delivery, and creating new livelihood opportunities.
States may also impose daily, weekly, or fortnightly authorisation fees on aggregators, the guidelines said. Aggregators, in turn, must ensure all registered riders meet legal and safety requirements—such as holding a valid driving licence, having insurance, and maintaining the vehicle in good condition.
Legal experts say the move provides clear legal backing under Section 67(3) of the Motor Vehicles Act, shifting the power to legalise such services entirely to state governments.
“This clause marks a significant shift in regulatory intent. For years, bike taxis have operated in a grey area, with legal uncertainties hampering growth and investment,” said Yash Joglekar, counsel at the Bombay High Court. “By formally acknowledging the potential for state-authorised bike taxi operations, the Centre has signalled its willingness to regularise the sector.”
While it’s not a blanket approval, the new guidelines clearly empower states to legalise bike taxi services if they wish. “The onus now lies on individual states to act. If implemented, this could be a turning point—bringing legitimacy, investor confidence, and improved last-mile connectivity across urban India,” Joglekar added.
Raheel Patel, partner at Gandhi Law Associates, echoed this view. “This is effectively a green light in principle. It gives state governments both the regulatory authority and the option to generate revenue—two key factors that were previously absent.”
For platforms like Rapido, Uber and Ola, the next step hinges on state-level decisions. In a statement, Rapido welcomed the guidelines: “We are committed to supporting state governments in operationalising this initiative in line with all stipulated norms.”
Uber called the Motor Vehicle Aggregator Guidelines (MVAG) 2025 “a forward-looking step toward fostering innovation and regulatory clarity in India’s digital mobility sector,” adding that timely adoption by states would be key to building predictability for all stakeholders.
States have responded differently to bike taxis. Karnataka, for instance, enforced a blanket ban on June 16, effectively halting Rapido’s core operations there. In contrast, Maharashtra has allowed bike taxis—but only electric ones.
Bike taxi services account for roughly 50 percent of Rapido’s overall revenue, with the rest split between auto and cab segments. Typically, bike taxi fares range from ₹20 to ₹50 for short rides—often half the price of auto-rickshaws and considerably cheaper than cabs. In recent weeks, drivers across Karnataka have staged protests, urging the state to lift the ban and adopt an inclusive regulatory framework.
Rapido’s business model is built around a SaaS (Software-as-a-Service), subscription-based approach for drivers—unlike the commission-per-ride model used earlier. Ola introduced its own SaaS model for auto drivers in April 2024, and Uber followed in February 2025. Ola has since expanded its zero-commission model across all categories.
(By arrangement with livemint.com)