MVAG 2025 introduces dynamic pricing, penalties, and mandatory insurance to improve ride-hailing services
New Guidelines Let Ola, Uber Double Fares During Peak Hours
The Ministry of Road Transport and Highways released the Motor Vehicle Aggregator Guidelines (MVAG) 2025 to regulate ride-hailing services nationwide.
Under the new rules, platforms like Ola, Uber, and Rapido can now charge up to twice the base fare during busy peak hours. Previously, the maximum surge was limited to 1.5 times the fare.
In contrast, fares can drop by as much as 50% below the base fare during off-peak hours, benefiting commuters who travel at less busy times.
Base Fare Must Cover Minimum 3 Km Including Dead Mileage
The updated fare system requires calculating the base fare for a minimum distance of 3 kilometers. This covers “dead mileage” — the distance drivers travel to reach passengers before starting the ride.
This change aims to ensure fair compensation for drivers while preventing unfair fare hikes for passengers.
Cancellation Penalties to Reduce Last-Minute Cancellations
To improve ride reliability, both riders and drivers face a cancellation penalty. If a ride is canceled without valid reason, a charge of 10% of the fare, up to ₹100, may be applied.
This step is designed to discourage unnecessary cancellations and reduce wait times for users.
Clear Charges Only for Actual Trip Distance
Passengers will be billed only for the distance between the pickup and drop-off points. Charges for the driver’s travel to reach the passenger will no longer apply, except when the entire trip is less than 3 km.
This prevents hidden fees and makes pricing more transparent.
Mandatory ₹5 Lakh Passenger Insurance for Safety
The new rules introduce compulsory insurance of ₹5 lakh coverage for passengers using ride-hailing services.
This safety measure provides financial protection in case of accidents and aligns with the government’s focus on passenger welfare.
States to Implement MVAG 2025 Within Three Months
All Indian states and union territories must adopt these new guidelines within three months.
Local authorities may also add rules specific to regional needs. The goal is a consistent, fair ride-hailing experience nationwide.
What This Means for Riders and Drivers
The MVAG 2025 balances fair pricing with flexibility and accountability.
Passengers can expect more transparent fares, better safety, and fewer cancellations. Drivers receive clearer compensation rules and protections.
For a smoother ride experience, users should watch for app updates reflecting these new policies soon.
