Regulatory Impact Assessment of Maharashtra City Taxi Rules 2017

Regulatory Impact Assessment
of
Maharashtra City Taxi Rules, 2017

2
of
Maharashtra City Taxi Rules, 2017
Published by
Consumer Unity & Trust Society
D-217, Bhaskar Marg, Bani Park, Jaipur 302016, India
Ph: 91.141.228 2821, Fx: 91.141.228 2485
Email: cuts@cuts.org, Web: www.cuts-international.org
© CUTS International 2018
Citation: Kulkarni, Amol & Tiwari, Arpit, Regulatory Impact Assessment of Maharashtra City Taxi Rules, 2017,
CUTS International, Jaipur, India
Authors
Amol Kulkarni & Arpit Tiwari
(CUTS International)
The material in this publication may be reproduced in whole or in part and in any form for education or non-
profit uses, without special permission from the copyright holders, provided acknowledgment of the source is
made. The publishers would appreciate receiving a copy of any publication, which uses this publication as a
source.
#1810

3
Contents
Foreword ................................................................................................................................................5
Preface......................................................................................................................................................7
Acknowledgement ...............................................................................................................................9
Summary of Key Findings ...............................................................................................................11
Executive Summary...........................................................................................................................13
Chapter 1: Regulating Innovation in Urban Mobility............................................................25
1. Innovation in Urban Mobility .................................................................................................................. 25
2. Regulatory Responses to Innovation ................................................................................................... 25
3. The Curious Case of Maharashtra .......................................................................................................... 29
4. Need for Regulatory Impact Assessment ............................................................................................ 31
5. Scope of the Report....................................................................................................................................... 33
Chapter 2: Minimum Engine Capacity ........................................................................................35
1. Regulatory Proposal..................................................................................................................................... 35
2. Intended Objective........................................................................................................................................ 35
3. Baseline ............................................................................................................................................................. 35
4. Impact Assessment....................................................................................................................................... 37
5. Net Impact........................................................................................................................................................ 42
6. Recommendations ........................................................................................................................................ 44
Chapter 3: Fleet Composition........................................................................................................46
3. Baseline ............................................................................................................................................................. 46
4. Impact Assessment (Scenario Analysis).............................................................................................. 49
5. Net Impact........................................................................................................................................................ 57
6. Recommendations ....................................................................................................................................... 61
Chapter 4: Permit Fee.......................................................................................................................65
3. Baseline ............................................................................................................................................................. 66
5. Net Impact........................................................................................................................................................ 72
Chapter 5: Requirement for PSV Badge.....................................................................................74

4
3. Baseline ............................................................................................................................................................. 75
5. Net Impact........................................................................................................................................................ 78
Chapter 6: Need to Operate Taxis on Clean Fuel.....................................................................83
3. Baseline ............................................................................................................................................................. 83
5. Net Impact........................................................................................................................................................ 86
Chapter 7: Colour Standardisation..............................................................................................90
3. Baseline ............................................................................................................................................................. 90
5. Net Impact........................................................................................................................................................ 93
Chapter 8: Conclusion and Way Forward..................................................................................94
1. Aggregate impact........................................................................................................................................... 94
2. Way Forward .................................................................................................................................................. 94

5
Foreword
Good processes lead to good outcomes. Regulators have traditionally given importance to
regulation over regulation making process, sometimes leading to unintended adverse
consequences. Hence, it is increasingly becoming clear that the latter is as important as
the former, if not more.
Regulations are expected to provide rational and reasonable provisions and harmonise
competing or conflicting interests of diverse stakeholders in a fair and transparent
manner. Hence, good regulation making process needs to be clear about the need and
objectives of regulation. It should compare different pathways which are likely to achieve
such objectives, and should adopt the one which is likely to achieve the same at the least
cost- social, economic and financial. While such analysis typically happens within a
regulatory agency, it lacks transparency and a coherent structure. Lack of wider and
adequate stakeholder consultation in a structured manner often leads to inefficient or ill-
defined regulation. Such sub-optimal regulation is unlikely to achieve its objective and
imposes higher costs than the expected benefits.
Regulatory Impact Assessment (RIA) is a universally recognised tool to assess the impact
of an existing or proposed regulation. It essentially involves robust stakeholder
consultation and structured feedback from them as input in policy making. This helps in
resetting of existing regulations and formulating good regulation optimally.
CUTS International, in this study on Regulatory Impact Assessment of Maharashtra City
Taxi Rules, 2017, provides a glimpse of the unintended consequences of regulations
which do not follow a transparent and structured process to assess costs and benefits of
the regulatory proposals. The study points out that despite good intentions of retaining
the benefits of innovation and technology in urban mobility sector and creating a level
playing field between incumbent taxi providers and technology enabled new innovative
players, if the Rules come into force, the cost to consumers for daily commute and the cost
to the drivers are likely to increase very significantly. In fact, a large number of drivers
will be driven out of business, leading to loss of livelihood and financial loss. The study
has quantified these costs. It has been based on data collected from 1000 consumers and
1000 drivers of taxis comprising 750 drivers linked to app based aggregators and 250
drivers of Black & Yellow Taxis in the Mumbai Metropolitan region.
Incumbent city taxi providers are already incurring significant compliance costs due to
provisions of the Maharashtra Motor Vehicles Rules, 1989 which are similar to the
Maharashtra City Taxi Rules, 2017 (such as permit, PSV badge, minimum engine capacity,
and clean fuel). Therefore, it indicates that there is a need to revisit the regulatory
framework even for incumbent city taxi (black and yellow taxi) and auto rickshaw service
providers so as to ensure that they are subject to reasonable and proportionate
regulatory requirements which are likely to achieve the regulatory objectives at least
costs to such incumbents as well.
The Committee constituted by the Government of Maharashtra under my chairmanship
for fixation of taxi and auto rickshaw fare in Maharashtra has also identified these rules
and a few more for a review and revision or deletion keeping the larger public and

6
commuter interest in mind. While some provisions, viz. , rules on permits, PSVA badge,
unclean fuel etc will hit the drivers directly, other provisions, viz., enforcement of a
specific colour scheme will impact fare pricing thereby hitting the consumer. In the end,
all such provisions will also entrail a significant cost on the economy and the society at
large.
The study recommends that it is high time that the regulatory agencies adopt process
reforms whole heartedly. While regulators like the Telecom Regulatory Authority of India
have a structured process of seeking public comments and counter comments on
regulatory proposals, this needs to be taken to the next level. Assessment of likely costs
and benefits of different regulatory proposals on relevant stakeholders, comparing
different regulatory proposals can be achieved if stakeholders are involved in regulation
making process. This would require a change of mind-set which does not view regulator
and regulated entities on distinct higher and lower pedestals but as equal partners in the
sustenance and development of the market in order to realise its true potential.
While the Central Government and related regulators have begun warming up to the idea
of cost – benefit analysis and Regulatory Impact Assessment, state and local regulators are
yet to appreciate the importance of this idea and approach fully.
I hope, CUTS International is able to take its study to different state level regulators and
other stakeholders for creating a demand for RIA. It is necessary to prise out the state
level regulators from their insularity into a transparent participatory process of
regulation making in order to make them wholesome and acceptable. That will also make
compliance that much easier and bring down regulatory compliance costs as well. I
congratulate them for coming out with this timely and important study on a sector in
which regulation is presently being widely debated and hope that the study can
contribute to such conversations. I wish CUTS International all the very best in this
initiative
BC Khatua
Chairman
Committee for determination of
Fare structure of Taxis and
Auto Rickshaws in Maharashtra

7
Preface
Regulation of key economic sectors in India typically has command and control features.
Regulators distrust the market and market players and thus end up micro-regulating.
Stringent conditions to enter and operate, significant discretion with regulatory
authorities, and limited redress options to stakeholders are common in sectors like
banking, insurance, and transport, among others.
Unsurprisingly, such regulation is a result of unverified assumptions, based on limited
data, and rarely involves consultations with stakeholders. Often, such regulation
artificially raises costs for market players. Incumbents are left with limited options but to
support barriers to competition. High costs and limited supply adversely impacts
consumer welfare.
More recently, technological innovations are emerging which target such market
inefficiencies by reducing cost of operations, and providing quality services to consumers
at affordable prices. Several sectors such as finance and mobility are experiencing benefits
from such mobile and internet enabled innovations.
However, such innovations do not necessarily fit within the existing regulatory
architecture, thus challenging regulators to design a framework for regulating innovation
which does not compromises on benefits experienced by different stakeholders.
Innovative business models also challenge existing business models in which incumbent
market players have invested heavily.
More often than not, regulators attempt to regulate innovation by tinkering with existing
regulatory framework, without envisaging the potential impacts of such approach. This
report suggests that such approach of levelling the playing field between existing and new
market players by increasing the cost of operations for all is not advisable. This finding is
based on a cost – benefit analysis of select provisions of recently issued Maharashtra City
Taxi Rules, 2017 (Rules), which intend to regulate the licensing of taxis linked with app
based aggregators in Maharashtra.
The report follows framework laid down by the Regulatory Impact Assessment (RIA)
approach, a globally recognised best practice in regulation making. RIA recommends
estimating and comparing impacts of proposed regulatory options with those of the
baseline scenario, and facilitates in selection of such option which has the potential to
result in maximum net benefits. RIA has been adopted in several jurisdictions including
United States, United Kingdom, and Australia, and has been recommended for India as
well.
The report finds that if the Rules come into force, consumers and taxi drivers are likely to
be most adversely impacted. Per day cost to consumers is likely to double and per day
cost to taxi drivers is likely to increase by more than five times. Such analysis is based on
data and information collected from in-depth discussions with 1,000 taxi drivers and
1,000 consumers of taxi services in Mumbai Metropolitan Region. In addition,
consultations with experts and other stakeholders have been carried out, along with
reviewing available literature and research reports.

8
Structured stakeholder consultations and evidence based policy formulation is key to an
RIA exercise and ensuring that regulatory proposals are close to reality. Such initiatives
also aid in stakeholder buy-in for regulatory changes.
CUTS has been a frontrunner in calling for adoption for India in India and we hope that
this report takes us closer to realising this dream.
Udai S Mehta
Deputy Executive Director
CUTS International

9
Acknowledgement
Efforts of several people have gone into making this report a reality. Involvement in
various forms, such as direct inputs, thought provoking discussions, timely reviews,
incessant encouragement and guidance have been crucial, in development of this report.
We are immensely grateful to Mr. B.C. Khatua for agreeing to write foreword for the
report and encouraging our efforts towards adoption of RIA. We also acknowledge the
inputs provided for the report by Shirish Deshpande and Varsha Raut, Mumbai Grahak
Panchayat, Anindita Kavoor, Consumer Guidance Society of India, Ashok Datar, Chairman
and Trustee, Mumbai Environmental Social Network, Ashok Ghanghrde, Independent
transport planner, Mumbai, Mandar Kagade, Consultant, Finance Research Group, IGIDR.
Special thanks to Ankit Pingle, Senior Research Associate, CUTS International for his
invaluable support in research and survey. We also appreciate the efforts of Madhuri
Vasnani for editing, Rajkumar Trivedi and Mukesh Tyagi for preparing the layout of this
report. Vijay Singh, Akshay Sharma and Nimra Khan deserve special mention for their
contribution to outreach of the report.
Words alone cannot convey our sincere gratitude to each and every individual who have
contributed in every small way towards bringing out this report. But it is only words that
this world thrives on. We express our sincere gratitude to all such individuals, whether or
not named above, without whom the publication of this report would not have been
possible.
CUTS International will not draw any profit from this report, since it is solely for
informative and educational purposes. In addition, any error that may have remained is
solely ours.

11
Summary of Key Findings
In March 2017, the Government of Maharashtra issued the Maharashtra City Taxi Rules,
2017 (Rules) for regulating the taxis linked with app based aggregators.
CUTS International has applied the RIA tool to estimate costs and benefits of select key
provisions of the Rules, likely to have direct and substantial impact on drivers and
consumers linked with app based taxi aggregators. The analysis has been informed by in-
person interactions with 1,000 drivers and 1,000 users of city taxi services in Mumbai
Metropolitan Region and consultations with relevant stakeholders.
It was found that different Rules impact diverse stakeholders in divergent manner. For
instance, while B/Y taxis are likely to be positively impacted by the Rules owing to likely
increase in demand, compact hatchback taxis are expected to be severely negatively
impacted owing to likely exit from the market. A stakeholder wise impact of Rules reveals
the following picture:
1. Consumers
If the Rules are enforced, the consumers are likely to incur significant additional
monetary as well as non-monetary costs. The monetary costs will be on account of high
fares of available modes of transport. Non-monetary cost is the additional amount which
the consumer is likely to be willing to pay to avoid travelling through inconvenient modes
like buses and B/Y taxis.
Rule
Average daily cost
to consumer in
baseline
Increase in daily cost to
consumer under the
Rules
Increase in
cost (%)
Minimum Engine
Capacity
-310 -115.89 37.38
Fleet Composition -360 -51.71 14.36
PSV badge -360 -105.33 29.26
2. Drivers linked with app based aggregators
If the Rules are enforced, the drivers linked with app based aggregators are likely to be
negatively impacted, when taken together. For instance, if the fleet composition
requirement is adopted, the aggregate costs to drivers with engine capacity above 980 CC
are likely to increase by around 93 percent from INR 1500 to INR 2899.01.
Similarly, in case the minimum engine capacity rule is adopted, compact hatchback taxis
(having engine capacity below 980 CC) will need to exit the market. Further, it may not be
possible to operate such taxis under AITP on inter-city routes. Consequently, owners of
such taxis would be required to forego the income from city taxi services while not having
alternative avenues to deploy the vehicle. Owing to increase in demand, taxis with engine
capacity above 980 CC are likely to experience positive impact.

12
3. Other modes of transport
If the Rules are enforced, alternatives to taxis linked with app based aggregators, i.e. B/Y
taxis and A/C buses are likely to witness increase in demand, and consequent increase in
income.
Rule
Average daily
income of B/Y taxi
Increase in average daily
income of B/Y taxi
Increase in
income (%)
Minimum Engine
Capacity
2,000 122.23 6.11
Fleet Composition 2,000 27.87 1.39
PSV badge 2,000 128.67 6.14
4. Aggregate impact
In aggregate, the Rules are likely to negatively impact the stakeholders, when taken
together.
Figures in INR per day
Rules/
Stakeholders
Minimum
Engine
Capacity
Fleet
Composition
Permit
and Fee
Requirement
for PSV
badge
Need to
operate
taxis on
clean
fuel
Colour
standardisation
Consumers
(actual)
-39.89 -30.77 -25.33
Consumers
(inconvenience)
-76 -20.94 -80
B/Y taxi 122.23 27.87 128.67
Compact
Hatchback taxi
-950 -950
Hatchback taxi 114 707.08 1.26 -0.05 -31.24 -26.03
SUV taxi -2106.09 -7.75 -1.64 -1.37
A/C Bus 22.16 5.05 23.33
Permit & Fee 0.82 0.8 0.1
Aggregators -36.1 -4.62 -41.54
Net impact -843.6 -1421.6 -5.69 -944.82 -32.88 -27.4
Negative Negative Negative Negative Negative Negative

13
Executive Summary
Background
It has been estimated that by 2030, cities across the world will cater to approximately 6 billion
people as compared with approximately 3.6 billion today. This comprises approximately 66
percent of the world’s population.1 Likewise, Indian cities are estimated to cater to
approximately 38 percent of the country’s total population. It has been projected that
India’s urban population will reach 0.6 billion people by 2030, twice the size of the United
States of America.2
Increase in pressure on cities has resulted in expansion of urban sprawl,3 consequently
increasing the average commute distances for its inhabitants.4 The increase in average
daily commuting time augments the need for point to point or intermittent public
transport (IPT) and results in an increase in the demand for motor-vehicles.
This increase in demand has led to emergence of new business models and technologies such as
app based aggregators which connect drivers of cars to potential consumers. Such aggregators
serve the rising urban consumer base, which hitherto remained underserved by
traditional service providers. For instance, the need for IPT in cities like Mumbai has been
traditionally met by the Black and Yellow (B/Y) taxis. No new B/Y taxi permits were
issued since 1997 until recently. This has resulted in imbalance between demand and
supply of taxis, which is largely being catered by app based aggregators since last few
years.
However, the advent of such technology enabled innovative services do not often fit
within the policies designed to regulate the services offered by traditional service
providers. Consequently, regulators in different Indian states have been attempting to
achieve regulatory convergence between different business models. Many states such as
Rajasthan, West Bengal, Karnataka and Maharashtra have taken initiatives to regulate taxis
linked with app based aggregators.
The curious case of Maharashtra
While the rules issued in Rajasthan, West Bengal and Karnataka have come into force, the
Maharashtra City Taxi Rules, 2017 (Rules)5 are yet to be enforced. Further, several
commuting options are available in a city like Mumbai, which is epitome of urban
1 https://www.mckinsey.com/featured-insights/urbanization/how-to-make-a-city-great
2 Ejaz Ghani, The smart cities project must promote diversity, LiveMint, 21 May 2018, at
https://www.livemint.com/Opinion/XENew1ujWdeGx6PQv9tJMK/The-smart-cities-project-must-promote-
diversity.html
3 Urban sprawl refers to the expansion of poorly planned, low-density, auto-dependent development, which
spreads out over large amounts of land, putting long distances between homes, stores, and work and creating
a high segregation between residential and commercial uses with harmful impacts on the people living in
these areas and the ecosystems and wildlife that have been displaced.
http://www.everythingconnects.org/urban-sprawl.html
4 http://iihs.co.in/knowledge-gateway/wp-content/uploads/2015/07/RF-Working-Paper-
Transport_edited_09062015_Final_reduced-size.pdf, “As populations increase, the average travel distances as
well as intensity are expected to increase as there is a direct correlation between the two indicators. Average
trips lengths for metro cities including Bengaluru are over 8 km, while it is 6 km or less for all other metro
cities. This trend in trip length and frequency is only expected to increase with increasing income levels,
migration, participation of women and a service-oriented economy. As more people travel over longer
distances on regular basis for employment and education purposes, will inevitably lead to road congestion.”
5Available at https://transport.maharashtra.gov.in/Site/Upload/Pdf/mahacts17%20.pdf, accessed on 15th
December 2017

14
sprawling in India. Thus, a closer look at interaction between users and providers of IPT
services in Mumbai is expected to offer unique insights. The Rules were issued to regulate
the licensing of taxis linked with mobile apps of taxi aggregators. The Preamble to the
Rules states that a large number of such taxis have been operating with the All India
Tourist Permits (AITP) albeit essentially operating as city taxis. It further highlights the
difference in regulation of city taxis and taxis operating with AITPs in cities of
Maharashtra, and calls for regulatory convergence. As per the Preamble, the Rules intend
to retain the advantages of app based taxis, viz. efficient demand/ supply matching,
dynamic price discovery, better commuter experience and upgradation/ modernisation of
taxi services.
Approach & Methodology
Any proposed regulation can impact different stakeholders in varied and divergent
manner. It is essential to ensure that costs of regulations are outweighed by their benefits.
Regulatory Impact Assessment (RIA) is a process of systematically identifying and
assessing direct and indirect costs and benefits of regulations on different stakeholders.
RIA is an important element of an evidence-based approach to policy making and review,
as it essentially comprises robust and structured stakeholder engagement. Impacts of
different regulatory options are compared with ‘as is’ scenario on the basis of
scientifically developed tools such as cost-benefit analysis, cost-effective analysis etc. and
thus the best possible regulatory intervention is selected, which has the potential to result
in maximum net benefits. RIA essentially answers the following questions:
Scope of the Report
This report presents findings of a limited RIA exercise conducted by CUTS International
on select provisions of the Rules. This involved assessment of costs and benefits of such
provisions, and estimation of the net impact on different stakeholders. Broad suggestions
with the intention of reducing costs and enhancing benefits are also provided.
Six specific provisions were identified for the purpose of in-depth cost-benefit analysis.
The relate to: i) minimum engine capacity ii) fleet composition, iii) permit fees; iv) fuel
type; v) Public Service Vehicle (PSV) badge; and vi) colour standardisation. These
provisions were selected as they are likely to have direct and substantial impact on taxi
drivers and consumers, and can provide a broad idea of aggregate impact of the Rules.
Due regard was also given to interest and expertise of CUTS International and available
resources.
The exercise was informed by robust primary research in form of interactions with 1000
drivers and 1000 users of city taxi services in Mumbai Metropolitan Region (MMR). Of
RIA
Answers
What is the problem being solved, and why did it emerge?
What will happen if the government does not act?
What kinds of actions could be envisaged to address the problem?
What are the consequences of possible actions?
Why is the proposed solution the best one? Does it best solve the problem by
achieving maximum net benefit?
Can the government implement the solution effectively?

15
Benefits (per
day)
Costs (per
day)
1000 drivers interviewed, 750 drivers were associated with app based taxi aggregators
while remaining 250 drivers drove black and yellow taxis. The exercise also involved in-
depth interaction with different relevant stakeholder groups including government,
experts, consumer representatives, taxi union representatives, academia, among others,
to understand their perspective on the Rules. An attempt has been made to estimate
quantitative and well as qualitative costs and benefits of the Rules on different
stakeholders such as consumers, taxi drivers, government and aggregators.
The provisions analysed under the study and related findings have been discussed below:
Minimum Engine Capacity
Regulatory Proposal: Taxis attached to any aggregator should have minimum engine
capacity of not less than 980 CC.
Objective: Ensuring adequate comfort for consumers and create a level playing field
between B/Y taxis and taxis linked with app based aggregators. Currently, B/Y taxis are
required to have a minimum engine capacity of 980 CC.
Baseline Scenario
Impact Assessment:
 Taxis with engine capacity less than
980CC (compact hatchback taxis) are
likely to exit the market, adversely
impacting such drivers.
 Consumers are likely to shift to AC
buses, hatchback taxis and B/Y taxis,
positively impacting such drivers, and
negatively impacting the consumers.
 In case consumers shift to AC buses,
while the actual fare will reduce,
consumers will bear inconvenience, to
avoid which they will be willing to pay
higher fare.
Recommendations
Better alternatives to ensure consumer safety and comfort, such as prescribing power to
weight ratio, should be explored, while undertaking cost benefit analysis. The restriction
on minimum engine capacity should be rationalised to allow taxis with engine capacity of
600 CC and above to link with app based aggregators.
12% B/Y Taxis in
Mumbai have engine
capacity less than 980
CC
99% drivers of taxis
linked with
aggregators felt that it
was unfair to fix
minimum engine
capacity
46% users of app
based taxis have used
taxis with low engine
capacity. 99% of such
users did not face any
problem

16
Fleet Composition
Regulatory Proposal: At least 30 percent of taxis linked with app based aggregators
must have engine capacity of 1400 CC and more (SUV taxis).
Objective: Facilitating optimal competition between high end taxis operating under
Previous Taxi Schemes6 and similar taxis linked with app based aggregators.
Baseline Scenario
Impact assessment
Following are the likely scenarios if fleet composition requirement comes into force:
In all scenarios, the demand for taxis with engine capacity less than 1400 CC (as projected
in normal growth scenario) is likely to outstrip their supply. Similarly, in most scenarios,
the supply for taxis with engine capacity more than 1400 CC is likely to outstrip their
demand (as projected in the normal growth scenario).
6 Currently, high end taxis with engine capacity of 1400 CC and more are predominantly operated under the
Fleet Taxi Scheme, 2006, Phone Fleet Taxi Scheme, 2010, and Call Taxi Scheme 2010
86% drivers revealed
that existing fleet
composition in line
consumer demand
Drivers of taxis with
engine capacity more
than 1400 CC felt that
government should
not decide fleet
composition
96% consumers stated
that there is no
shortage of SUVs while
booking app based
taxis
40637
52869
40637 38956
44415
4990
2139
2783 17416
16696
19035
2139
42776
55652
58053
55652
63450
7129
0
15000
30000
45000
60000
75000
2017 Normal growth Scenario 1 Scenario 2 Scenario 3 Scenario 4
Taxis having engine capacity less than 1400 CC Taxis having engine capacity more than 1400 CC
Total taxis linked with app based aggregators

17
Benefits (per
day)
Costs (per day)
 Consumers who are unable to find
taxis with engine capacity below
1400 CC are likely to shift to AC
buses, SUV taxis and B/Y taxis,7
positively impacting such drivers.
However, given that supply of SUV
taxis will outstrip the demand, such
drivers will be negatively impacted.
 In case consumers shift to AC
buses, while the actual fare will
reduce, consumers will bear
inconvenience, to avoid which they
will be willing to pay higher fare.
 Government will collect permit and
fees owing to increase in number of
SUV taxis.
Recommendations
The minimum fleet capacity requirement should be removed. A periodic market analysis
should be conducted to assess if supply of taxis is corresponding to demand and artificial
barriers are present. Also, a market for tradeable fleet composition certificates could be
created wherein aggregators who link more than desired number of taxis should be in a
position to sell the certificates to aggregators who are unable to do so.
Permit & Fee
Regulatory Proposal: Taxis attached to any aggregator will be required to obtain a
permit called the App Based City Taxi Permit (ABCTP) by paying prescribed fees (and
taxes). Currently, taxis linked with app based aggregators are operating with All India
Tourist Permit (AITP).
Taxis
Permit fee
(AITP)
Permit fee
(ABCTP)
Taxes
(AITP)*
Taxes
(ABCTP) **
Hatchback taxis
(INR)
1,500 25,000 8,000 7,150
SUV Taxis (INR) 1,500 2,61,000 12,000 7,150
*Annual. All others figures are one time. **Assumption. As B/Y taxis are subject to this.
Objective: Creation of a level playing field between the incumbent B/Y taxis and SUV
taxis and corresponding taxis linked with app based aggregators.
7 The probability of a consumer finding a taxi with engine capacity less than 1400 CC differs in each of the
scenario.

18
Benefits (per
day)
Costs (per
day)
30% permits
previously auctioned
for high end taxi
service remained
unacquired
Almost all drivers
associated with
aggregators possess
AITP and a substantial
proportion are not
willing to surrender
the permits
Consumers care
about safety and
comfort and not
about type of permit
driver posseses
Baseline Scenario
Impact Assessment
 The cost of operations for drivers is
likely to increase. Those drivers who
will be unable to afford the higher fee
requirement may exit the market, thus
adversely impacting their revenue.
This may result in increase in fare for
consumers.
 The government is likely to collect
higher revenue.
 The request may result in achieving
the regulatory objective, however, the
same is likely to happen at
prohibitively high costs.
Recommendations
Taxis with AITPs should be permitted to operate under the Rules without surrendering
their existing permit. The permit fee should be decreased for all types of taxis and should
be nominal and uniform. Fee paid under different rules should be set off from the permit
fee applicable under the Rules.
Public Service Vehicle (PSV) Badge
Regulatory Proposal: A driver is required to have a valid commercial driving license to
drive a taxi and a valid PSV Badge issued by the licensing authority. To obtain PSV badge,
one should have state domicile8, topographical knowledge of area of operation and
working knowledge of Marathi.
Objective: To ensure that the passengers are not inconvenienced, and local employment
is promoted.
8 Residence in Maharashtra for 15 years

19
Baseline Scenario
Impact Assessment
 Drivers eligible for obtaining PSV badge will
invest necessary resources to obtain it.
 Drivers who are not eligible will be adversely
impacted. For instance, ineligible drivers-
owners of taxis with engine capacity less
than 980 CC will have to leave the market
and might not even be in a position to
operate the taxi with AITP, resulting in
significant loss.
 The government is likely to benefit owing to
the collection of fee to issue PSV badge.
 A reduction in number of taxis will force
consumers to shift to other options, thus
creating inconvenience and increased costs.
This may benefit drivers of such alternate
modes of transport.
Recommendations
Mandatory conditions such as permanent residence of Maharashtra result in artificial
restrictions on employment. These conditions need to be avoided while job creation and
entrepreneurship should be promoted. Further, the requirement of PSV Badge can be
replaced with conditions like Aadhaar number, residential address proof, and contact
details of two family members (akin to the procedure in other states), to ensure
authenticity of drivers. This relaxation should be provided to incumbent taxi service
providers as well.
Further, consumers appreciate if drivers have reasonable awareness of topography and
local language. Most drivers already meet such condition. Consequently, the condition for
drivers to have reasonable awareness of topography and local language may be retained.
However, the process of certification should be proportional and should not create
artificial barriers. Any rejection on these grounds should be in writing and with adequate
reasons. Proportional certification requirements should be ascertained through a robust
stakeholder consultation process. In addition, monitoring and supervision of drivers
should be improved. Efforts for speedy grievance redress need to be made.
linked with app
based aggregators
are not eligible to
apply for PSV Badge
Many taxis remain
unoperational owing
to unavailability of
drivers fulfilling
domicile condition
Most drivers are
reasonably familiar
with local language
and topography
Benefits (per
day)
Costs (per
day)

20
Need to Operate Taxis on Clean Fuel
Regulatory Proposal: A taxi registered under the Rules is required to be driven on clean
fuel.9 Such vehicle should meet emission standards as prescribed from time to time by the
Transport Authority. If the services of any working taxi operating under some valid
permit are intended to be offered through any aggregator, then the said taxi is required to
convert to be driven on clean fuel, within one year from commencement of the Rules.
Objective: All incumbent city taxis operate on clean fuel. Therefore, the intention is to
create a level playing field between the incumbent taxis, and the taxis linked with app
based aggregators, and benefit environment.
Baseline Scenario
Impact Assessment
 The owners of taxis operating with diesel fuel
will need to invest resources to convert diesel
assembly into petrol/ CNG assembly. The taxi
owners will need to bear such costs, which is
likely to be passed on to consumers. If such
conversion is not possible, taxi owners will
need procure new taxis with clean fuel. This
will increase cost to taxi owners, and
consequently consumers.
 Operation of taxis with clean fuel is expected
to positively impact the environment.
Recommendations
Instead of regulating type of the fuel, government may regulate emission standards. This
is likely to promote innovation and benefit environment. Also, taxis operating with clean
fuel may be incentivised. The transition period to comply with clean fuel requirement
must be reviewed and decided based on consultation with relevant stakeholders. For
instance, the taxis may be replaced after the existing permit expires by natural efflux of
time, which is also in line with the judgement of Supreme Court in the National Capital
Region (NCR) for a similar issue. The Government should provide adequate support to
taxi drivers to manage the transition, and focus on improving the CNG infrastructure in
the city.
9 Clean Fuel - Unleaded petrol or CNG or LPG or Hybrid or Electrical
77% drivers of diesel
taxis expressed
inability to
convert/change their
taxis
taxis opined that
taxis are not the
major source of
pollution
taxis agreed to such
rule being
implemented during
3-5 years
Benefits
(per day)
Costs (per
day)

21
48% of users opined
that standard colour
of taxis may not
impact ease of
locating taxis
64% of drivers
thought that there
would be no benefit
associated with
standardised colour.
87% users found it
easy to locate their
booked taxi in a
crowded location
Colour Standardisation
Regulatory Proposal: All taxis operating under ABCTP shall be painted as specified
below:
Vehicle specifications White Colour
Front and rear bumper of vehicle White Colour
Lower side of the vehicle Daffodil Yellow Colour
Objective: To make it easy for commuters to identify taxis at locations with large number
of vehicles moving at any point of time, while creating level playing field between
different taxi operators.
Baseline Scenario
Impact Assessment
 The drivers will incur extra costs
in getting the taxis repainted.
Further, drivers may not be able
to earn additional revenue
through advertisement, due to
limited space available after the
repaint. This may increase cost
of operations without increasing
revenue.
 The cost incurred by drivers may
be passed on to the consumers
resulting in increase in fares.
Recommendations
The colour standardisation requirement can be done away with, and if there is a need to
differentiate taxis from other vehicles, a sticker of the name of aggregator, or the logo of
such aggregator at all sides of the taxis should suffice.
Benefits
(per day)
Costs (per
day)

22
Aggregate Impact
The table below presents the aggregate impact and highlights that different Rules impact
diverse stakeholders in divergent manner. For instance, while B/Y taxis are likely to be
positively impacted by the Rules owing to likely increase in demand, compact hatchback
taxis are expected to be severely negatively impacted owing to likely exit from the market.
Further, while the Rule on minimum engine capacity may positively impact hatchback
taxis on account of increased demand, the Rule on clean fuel and colour standardisation is
likely to negatively impact such taxis. In aggregate, the Rules are likely to negatively
impact all stakeholders taken together.
Rules/
Stakeholders
Minimum
Engine
Capacity
Fleet
Composition
Permit
and Fee
Requirement
for PSV badge
Need to
operate
taxis on
clean
fuel
Colour
standardisation
Consumers
(actual)
-39.89 -30.77 -25.33
Consumers
(inconvenience)
-76 -20.94 -80
B/Y taxi 122.23 27.87 128.67
Compact
Hatchback
-950 -950
Hatchback 114 707.08 1.26 -0.05 -31.24 -26.03
SUV -2106.09 -7.75 -1.64 -1.37
Bus 22.16 5.05 23.33
Permit & Fee 0.82 0.8 0.1
Aggregators -36.1 -4.62 -41.54
Net impact -843.6 -1421.6 -5.69 -944.82 -32.88 -27.4
A closer look at the stakeholder wise impact of Rules reveals the following picture:
1. Consumers
If the Rules are enforced, the consumers are likely to incur significant additional
monetary as well as non-monetary costs. The monetary costs will be on account of high
fares of available modes of transport. Non-monetary cost is the additional amount which
the consumer is willing to pay to avoid travelling through inconvenient modes like buses
and B/Y taxis.
Rule
Average daily cost to
consumer in baseline
Increase in daily cost to
consumer under the
Rules
Increase in
cost (%)
Minimum Engine
Capacity
-310 -115.89 37.38
Fleet
Composition
-360 -51.71 14.36
PSV badge -360 -105.33 29.26

23
2. Drivers linked with app based aggregators
If the Rules are enforced, the drivers linked with app based aggregators are likely to be
negatively impacted, when taken together. For instance, if the fleet composition
requirement is adopted, the aggregate costs to drivers with engine capacity above 980 CC
are likely to increase by around 93 percent from INR 1500 to INR 2899.01.
Similarly, in case the minimum engine capacity rule is adopted, compact hatchback taxis
(having engine capacity below 980 CC) will need to exit the market. Further, it may not be
possible to operate such taxis under AITP on inter-city routes. Consequently, owners of
such taxis would be required to forego the income from city taxi services while not having
alternative avenues to deploy the vehicle. Owing to increase in demand, taxis with engine
capacity above 980 CC are likely to experience positive impact.
3. Other modes of transport
If the Rules are enforced, alternatives to taxis linked with app based aggregators, i.e. B/Y
taxis and A/C buses are likely to witness increase in demand, and consequent increase in
income.
Rule
Average daily income
of B/Y taxi
Increase in average daily
income of B/Y taxi
Increase in
income (%)
Minimum Engine
Capacity
2,000 122.23 6.11
Fleet
Composition
2,000 27.87 1.39
PSV badge 2,000 128.67 6.14
Way Forward
As indicated earlier, different regulatory proposals can impact diverse stakeholders in
divergent manner. Consequently, there is a merit in beginning to think about costs and
benefits of regulatory proposals prior to their adoption and assessing whether the
regulatory objectives are likely to be met at minimum costs.
This holds true in case of Rules as well. It may be useful to consider alternatives to some
of the provisions of the Rules, estimate their impacts and examine if such alternatives are
likely to meet the regulatory objectives at lesser costs, than those likely to be imposed by
the Rules. Some alternatives have already been discussed elsewhere.
It must also be noted that several incumbent city taxi providers are already subject to
provisions similar to Rules (such as PSV badge, minimum engine capacity, clean fuel) and
are incurring significant compliance cost. In fact, one of the rationale for introduction of
the Rules was to create level playing field between incumbent city taxi providers and taxis
linked with app based service providers. A level playing field may not necessarily be
achieved by increasing the costs of new market entrants to match the costs of incumbents
but can also be created by reducing the costs of incumbents to match the costs of new
entrants. In other words, there is a need to revisit the regulatory framework for
incumbent city taxi providers and ensure they are subject to reasonable and
proportionate regulatory requirements which are likely to achieve the regulatory
objectives at least costs to such incumbents.
However, reforming specific existing regulatory provisions may not necessarily ensure
that similar regulatory frameworks will not be issued in future wherein costs may

24
outweigh benefits. Thus, there is a need to reform the regulation making process and
institutionalise the process of considering impacts of regulatory proposals in advance.
RIA serves this purpose. To ensure the adoption of RIA in the regulatory process, political
will is necessary. Various expert committees and independent studies10 have already
recommended adoption of RIA in India. These include erstwhile Planning Commission’s
Working Group on Business Regulatory Framework (WGBRF) (2011)11, Financial Sector
Legislative Reforms Commission (FSLRC) (2013), Committee for Reforming the
Regulatory Environment for Doing Business in India (2013), Tax Administration and
Reforms Commission (2015), and the Department of Industrial Policy and Promotion’s
Expert Committee on Prior Permissions and Regulatory Mechanism (2016).
More recently, the Ministry of Commerce & Industry, Government of India has constituted
a Better Regulation Advisory Group with the objective of improving regulatory processes.
A sub-group consisting of CUTS International and Federation of Indian Micro and Small
and Medium Enterprises (FISME) was tasked to suggest a mechanism for adoption of RIA
in India, for ministries and regulators under the Central Government to improve
regulatory processes.12
Moreover, to enable institutionalisation of RIA, training and capacity building of relevant
government institutions to undertake in-depth RIA would be required. Building such
capacity and conducting periodic RIAs would put significant strain on exchequer.
However, the consequent benefits of improved regulatory governance and imposition of
minimal costs on stakeholders to achieve regulatory objectives are expected to outweigh
the costs of institutionalisation and conducting RIA.
10
CUTS projects on Regulatory Impact Assessments in India are available at http://cuts-
ccier.org/ria/
11 to which CUTS acted as a Knowledge Partner
12 http://pib.nic.in/newsite/PrintRelease.aspx?relid=176264

25
Chapter 1: Regulating Innovation
in Urban Mobility
1. Innovation in Urban Mobility
Across the globe, technology led innovation is permeating different walks of life. It is
helping solve problems of inadequate access, high costs and low quality of goods and
services across sectors. Ubiquity of mobile phones is aiding rapid upscaling of such
innovation. Unsurprisingly, entrepreneurs are rapidly integrating such innovation for
improving service delivery sectors like finance, hospitality, retail and urban mobility.
Such technology led innovation has led to the emergence of mobile based platform
markets which match providers with users of goods and services. While platforms have
existed for years, information technology has profoundly reduced the need to own
physical infrastructure and assets. It makes building and scaling up platforms vastly
simpler and cheaper, allows nearly frictionless participation that strengthens network
effects, and enhances the ability to capture, analyse, and exchange huge amounts of data
that increase the platform’s value to all.
In the urban mobility sector, a mobile application (app) based aggregator model has
emerged wherein the transport service providers such as vehicle owners and users of
transport services are connected through an app on which they are registered to match
demand of services with available supply.
The innovation in urban mobility has the potential to provide reliable and convenient
transport services to the doorsteps of users at affordable prices. Thus, private vehicle
ownership is expected to be discouraged, congestion is likely to be reduced and the
vehicles are expected to be optimally utilised.13 In addition, the need for on-street parking
is expected to be reduced substantially.14 The innovation is likely to cut transaction costs,
improve the allocation of available capacity and reduce information asymmetries between
drivers, fleet operators and passengers.
The changes in service delivery model are not always consistent with regulatory
frameworks hitherto applicable in such sectors. Consequently, regulators across sectors
are revisiting existing frameworks to design regulations suitable for such technology
enabled models.
2. Regulatory Responses to Innovation
The importance of regulatory frameworks in transport sector should not remain
understated. They can influence the type and size of the vehicles on road, the mix between
public transport and shared vehicles, and ultimately, the amount of vehicular travel,
congestion and emissions in the city.15
13 Ganesh, Venkatesh, Car wars: taxi aggregators tweak biz models, Business Line, 27th October 2015, accessed
on 15th December 2017, at http://www.thehindubusinessline.com/companies/car-wars-taxi-aggregators-
tweak-biz-models/article7810629.ece
14 International Transport Forum, Urban Mobility System Upgrade: How shared self driving cars could change
city traffic, OECD and Corporate Partnership Board Report, 2015
15 International Transport Forum, Urban Mobility System Upgrade: How shared self driving cars could change
city traffic, OECD and Corporate Partnership Board Report, 2015

26
The growing popularity of app based taxi aggregators has caught authorities off-guard. A
predictable regulatory response has been an attempt to fit these within the existing
regulatory frameworks.
Principles for Regulation of App Based Taxi Aggregators
In order to guide regulators, the International Transport Forum has issued ten guiding
principles for regulation:
1. Regulation should be limited to correcting market failures.
2. Regulation should rely on the most efficient tools.
3. Regulation should be technology neutral and should not discriminate between
operators in a market.
4. The impact of regulation and its relevance should be monitored and re-assessed.
5. Regulation should be adaptable.
6. There should be an adequate division of regulatory responsibility.
7. Regulation should be clear and easy to apply.
8. Regulation should be focused.
9. Regulation should be based on sound economic principles.
10. Regulation should be inclusive of all social groups.
Source: International Transport Forum, App based Ride and Taxi Services: Principles for Regulation, OECD, 2016
In India, the power to legislate on mechanically propelled vehicles lies with central as well
as state government.16 Accordingly, the Central Government has promulgated the Motor
Vehicles Act, 198817 (MV Act). The MV Act authorises a regional transport authority in the
state to grant a permit for contract carriage i.e. motor vehicle which carries passengers,
subject to the specified conditions.18 It also empowers the state transport authorities to
grant permits for tourist vehicles for operation in the state, subject to the specified
conditions.19 Such permits are typically referred as All India Tourist Permits (AITPs).
Central20 and state governments21 are also empowered to make rules under the MV Act.
Accordingly, the central government has issued the Central Motor Vehicles Rules, 198922.
Similarly, several state governments have issued rules under the MV Act.23 In addition,
state governments are authorised under the MV Act to regulate different aspects of urban
mobility.24 Accordingly, several Indian states have taken initiatives to regulate innovation
in urban mobility. Such regulations mostly focus on conduct of drivers, accountability of
aggregator in case of misconduct by drivers, and recording and sharing of mobility data
by the aggregator with the regulators.
In issuing respective regulations, most states appear to have taken in account an advisory
issued by the Ministry of Road Transport and Highways (MoRTH), Government of India.25
16 Item 35 of List III (Concurrent List) of the Constitution of India: “Mechanically propelled vehicles including
the principles on which taxes on such vehicles are to be levied.”
17http://www.advocatekhoj.com/library/bareacts/motor/1.php?Title=Motor%20Vehicles%20Act,%201988
&STitle=Short%20title,%20extent%20and%20commencement
18 Section 74 of the MV Act
19 Section 88(9) of the MV Act
22 http://www.lawsindia.com/Advocate%20Library/Amendments/Cen_motor_vehi_rules_1989/MAIN.htm
23 For example, Maharashtra Motor Vehicles Rules 1989
24 Such as sections 74, 89 (1), 93, 95 (1), 96(2)(xxviii) of the MV Act.
25 The advisory is available at http://morth.nic.in/showfile.asp?lid=1822, accessed on 15th December 2017.

27
However, at times, regulations cover other aspects of mobility as well, such as vehicles
permitted and fuel type, etc. The table below provides a broad snapshot of emerging
regulations of urban mobility in select Indian states.
Regulation of app based taxis across states
Type of
regulation
MoRTH
advisory
26
Districts
of
Haryana
in NCR27
Karnataka
28
Rajasthan
29
West
Bengal30
Madhya
Pradesh
(draft)31
Delhi32
Engine
Capacity/
vehicle
type
No
restriction
600CC and
above with
seating
capacity
not
exceeding
6
excluding
driver
No
restriction
No
restriction
Motor
cabs with
sitting
capacity
of up to
6+1
excluding
meter
taxis
No
Restriction
600CC and
above with
seating
capacity
not
exceeding
7 including
driver
Fuel type Meet
emission
standards
as
prescribed
from time
to time
CNG/ LPG No
restriction
No
restriction,
to be run
on CNG
when
proposed
to be
operated in
NCR
No
restrictio
n
Clean Fuel Clean Fuel
Colour No
restriction
White,
with blue
coloured
strips on
both sides
displaying
name of
licensee
No
restriction
No
restriction
No
restrictio
n
As specified
by the
Transport
Commissione
r
White,
with
coloured
stripes on
both sides
of taxi
Public
Service
Vehicle
Badge
Self-
attested
copy of
EPIC card,
PAN card,
residential
address
proof,
Required Required Police
verification,
self-
attested
copy of
EPIC card,
PAN card,
residential
Self-
attested
copy of
EPIC card,
PAN card,
residentia
l address
proof,
Driver shall
have valid
licence of
driving the
vehicle.
Required
26 The Advisory for licensing, compliance and liability of on-demand information technology based
transportation aggregator issued by MoRTH is available at
http://morth.nic.in/showfile.asp?lid=1822, accessed on 15th December 2017
27 NCR Motor Cab (Taxi) Scheme, 2016, available at
https://haryanatransport.gov.in/srservices/vahan/gui/jsp/notification_frame.jsp,
accessed on 15th December 2017
28 The Karnataka On-Demand Transportation Technology Aggregators Rules, 2016, available at
29 The Rajasthan On-Demand Information Technology Based Transportation by Public Service Vehicle Rules,
2016, available at http://www.transport.rajasthan.gov.in/content/dam/transport/transport-
dept/pdf/notificationrule/notificationrules.pdf, accessed on 15th December 2017
30 The Directives to regulate the operational activities/ conduct of the On-Demand Transportation
Technologies Aggregators, 2015 available at
https://wbxpress.com/wp-content/uploads/2016/03/4450-WT.pdf, accessed on 15th December 2017
31Draft Rules, Transport Department, Madhya Pradesh, available at:
http://govtpressmp.nic.in/pdf/extra/2017-10-13-563.pdf , accessed on 15th January , 2018
32 City Taxi Scheme – 2015 by Transport Department, available at
http://delhi.gov.in/wps/wcm/connect/f9c68480499d268a87b99f018ef168b1/Taxi.compressed.pdf?MOD=A
JPERES&lmod=-370276847 accessed on 15th December 2017

28
Type of
regulation
MoRTH
advisory
26
Districts
of
Haryana
in NCR27
Karnataka
28
Rajasthan
29
West
Bengal30
Madhya
Pradesh
(draft)31
Delhi32
contact
details of
two family
member
address
proof,
contact
details of
two family
members
contact
details of
two
family
members
Vehicle
eligibility
Registered
and
compliant
with law
and
regulation
s
prescribed
under the
Act
including
intermedia
ry
guidelines
Permit
issued by
State
Transport
Authority
under
section 74
of the Act
Permit
issued
under
section 74
or section
88(8) of the
Act
Public
Service
Vehicle to
be validly
registered
under
provisions
of the Act
and holds
relevant
permit to
ply in the
given area
Permit or
any other
document
as
prescribe
d and
issued
under
applicable
laws,
including,
but not
limited to,
an AITP
or state
tourist
permit
Vehicle must
be validly
registered,
having valid
certificate of
fitness,
insurance,
pollution
control.
Permit
issued by
State
Transport
Authority
under
section 74
of the Act
Driver
eligibility
No
restriction
Valid
commercia
l driving
licence ,at
least be
middle
school
pass,
Adequate
knowledge
of roads
and routes
of NCR
area
Resident of
Karnataka
for at least 2
years and
working
knowledge
of Kannada
and any
other
language,
preferably
English
No
restriction
No
restrictio
n
No
restriction
Valid
commercia
l driving
licence, at
least be
middle
school
pass,
Adequate
knowledge
of roads
and routes
of NCR
area
Source: Author Relevant state laws sourced from WRI India, New Mobility Policy Database, 201733
In addition to the advisory as mentioned above, the MoRTH had constituted a committee
to review the issues relating to taxi permits. In December 2016, the committee released
its report recommending, inter alia, to the states that the AITP taxis may be allowed to
operate for point to point trips within a city except as street hailing taxis. These vehicles
would have to comply with the fuel specified for the respective states while operating for
aggregators. It further advised states to avoid unreasonable restrictions that would limit
operations of taxis, thereby causing inconvenience to the citizens and increased use of
personalised vehicles.34
The central government has also initiated amendments to the Act pursuant to the Motor
Vehicles (Amendment) Bill, 2016 (Bill). The Bill explicitly legitimises the aggregator
33 Available at http://www.wricitieshub.org/newmobility/sites/default/files/Policcy%20database_Final.pdf ,
34 The Report of MoRTH committee is available at http://morth.nic.in/showfile.asp?lid=2525 , accessed on
15th December 2017

29
business model by defining ‘aggregator’ and amended section 9335 of the Act in this
regard. Further, it provides greater regulatory independence to central and state
governments. For instance, by authorising respective governments to issue directions to
aggregators and drivers, power to relax applicability of certain provisions, modify permits
to meet certain objectives. The objectives include: promoting effective competition among
transport service providers, better utilisation of transportation assets, improving urban
transport, and reducing congestion.36 The Lok Sabha passed the Bill in April 2017 and is
pending under consideration of the Rajya Sabha, the upper house of the Parliament.
3. The Curious Case of Maharashtra
The Government of Maharashtra issued a draft City Taxi Scheme in 2015, which failed to
see light of the day.37
On 04 March 2017, the Government of Maharashtra notified the Maharashtra City Taxi
Rules, 2017 (Rules).38 The intent of the Rules is to regulate the licensing of taxis linked to
mobile apps of taxi aggregators. The Preamble to the Rules notes that a large number of
such taxis have been operating with the AITPs issued under section 88(9) of the Motor
Vehicles Act, 1988 (Act), but are essentially operating as city taxis.
City taxis operating in Maharashtra have been hitherto issued three types of permits:
i) street hail or black and yellow (B/Y) taxis or cool cabs permitted under section 74 of
the Act;
ii) taxis permitted under the Fleet Taxi Scheme, 2006 to operate under existing permits
originally issued for black and yellow taxis; and
iii) taxis permitted under the Phone Fleet Taxi Scheme, 2010 operating on permits which
were auctioned and sold.
The table below highlights key features of taxis under these schemes.
35 The amendment explicitly requires aggregators to obtain license from the state government, subject to
specified conditions. It further provides that while issuing the licence to an aggregator, the state government
is required to follow such guidelines as may be issued by the Central Government. In addition, every
aggregator is required to comply with the provisions of the Information Technology Act, 2000 and the rules
and regulations made thereunder.
36 See, sections 67 and 88A of the Bill. Draft of the Bill as introduced in the Lok Sabha is available at
http://www.prsindia.org/uploads/media/Motor%20Vehicles,%202016/Motor%20Vehicles%20%28Amend
ment%29%20Bill,%202016-.pdf , accessed on 15th December 2017
37 Available at https://www.ndtv.com/india-news/uber-takes-on-maharashtra-government-over-mumbai-
taxi-scheme-1244487, accessed on 30th March 2018. The draft was rejected by law and justice department.
See, https://www.hindustantimes.com/mumbai-news/maharashtra-city-taxi-scheme-2016-state-issues-
revised-draft-seeks-citizens-opinion-by-nov-5/story-PwBTROtBjVKslRxmluA4gJ.html, accessed on 30th
March 2018
38 Available at https://transport.maharashtra.gov.in/Site/Upload/Pdf/mahacts17%20.pdf, accessed on 15th
December 2017

30
Key features of city taxis operating in Maharashtra
Type of
Regulation
Black and yellow taxis
permitted under Act
Permitted under Fleet
Taxi Scheme
Permitted under
Phone Fleet Taxi
Scheme
Minimum engine
capacity
980 CC 1400 CC 1400 CC
Fuel CNG CNG CNG
Permit fee (per
vehicle)
INR 25,000 Existing permits
allowed
INR 2,61,000
Mode of pick up Street hail and
designated stands
Pre-booked rides Pre-booked rides
Facility - Air conditioner Air conditioner
Fare Regulated with meter Regulated with meter Regulated with meter
Source: Preamble to Rules
Attempt to bring regulatory convergence between incumbents and app based taxis
Type of Regulation Requirement under Rules Attempted convergence with
Minimum engine
capacity
980 CC Black and yellow taxi regulation
Fleet composition At least 30 percent of taxis attached
with aggregator should have engine
capacity of 1400 CC or more
Fleet Taxi Service Scheme and
Phone Fleet Taxi Scheme
Fuel Vehicles should be driven on clean
fuel i.e. unleaded petrol or CNG or
LPG or Hybrid or Electric power.
Existing diesel fuel based vehicles
should be converted to clean fuel
within a period of one year from
the date of commencement of the
Rules
Black and yellow taxi regulation,
Fleet Taxi Service Scheme and
Permit fee INR 25,000 per vehicle below
engine capacity of 1400 CC and INR
2,61,000 per vehicle above engine
capacity of 1400 CC
Black and yellow taxi regulation and
Need for Public Service
Vehicle (PSV) Badge
Yes Black and yellow taxi regulation,
Fleet Taxi Scheme and Phone Fleet
Taxi Scheme
Source: Author
The preamble to the Rules note that there is a difference in regulation of city taxis and
taxis operating with AITPs in cities of Maharashtra, which calls for regulatory
convergence. It further provides that such convergence must retain the advantages of app
based taxis, viz. efficient demand/ supply matching, dynamic price discovery, better
commuter experience and upgradation/ modernisation of taxi services. As a result, the
Rules retain several features of existing regulations applicable to city taxis in
Maharashtra. The table below provides a snapshot of such attempted regulatory
convergence.
A summary comparison of regulatory framework of Government of Maharashtra and
other states revealed that the former has adopted a slightly different approach to regulate

31
innovation in mobility. This might be done to create a level playing field between
incumbents and new entrants in the market.
However, the validity of the Rules has been challenged by the drivers/ owners linked with
app based taxi aggregators and aggregators themselves before the Bombay High Court
and the matter is sub-judice.39 In the interim, the Government of Maharashtra constituted
an expert committee to review fare and other related matters of taxis and autos, under
the chairmanship of Mr. B.C. Khatua. The committee has recently released its report: the
Taxi Auto Fare Committee Report 2017 (Khatua Committee Report),40 wherein it has
suggested amendments to some of the Rules. The government has submitted that it will
not take coercive action under the Rules till further directions issued by the Court.41
Given the unique nature of urban mobility situation in Mumbai42, it is pertinent to closely
review the Rules and assess potential impacts on different stakeholders.
4. Need for Regulatory Impact Assessment
Any change in the prevailing regulatory scenario may be perceived differently by different
stakeholders. While some may welcome the change, others may view it with suspicion
and thus show resistance. This has been observed in the case of the Rules as well.
A sub-optimal regulation has the potential to increase the cost of administration and
compliance, have unintended outcomes, and limits the likelihood of achievement of its
objectives. Moreover, it can raise complexity and uncertainty associated with obligations,
which must be avoided.
Consequently, only such regulations must be adopted which can achieve intended
objectives with least possible distortions. Therefore, it is of paramount importance to
understand the costs and benefits of any regulation on different stakeholders. One of the
systematic approaches to critically assess impacts of regulations is by undertaking
Regulatory Impact Assessment (RIA) study.
It is a process of systematically identifying and assessing direct and indirect impacts of
regulations, using consistent analytical methods. It involves a participatory approach via
public consultation to assess such impact, determination of costs and benefits, and
selection the most appropriate regulatory alternative. It is a method of estimating the
likely impacts of regulation ‘before’ it is adopted, and comparing different options to
determine which produces the best result.
RIA is an important element of an evidence-based approach to policy making, as it
essentially comprises stakeholder engagement in policy making and review. Impacts of
regulatory options are compared with ‘as is’ scenario on the basis of scientifically
developed tools such as cost-benefits analysis, cost-effective analysis etc. and thus the
39 Writ Petition 1329/2017 in the Bombay High Court, accessed on 15th December 2017
40 The report is available at
https://transport.maharashtra.gov.in/Site/Common/ViewPdfList.aspx?Doctype=421c4209-3a6e-4eba-9248-
47bfb7533389, accessed on 15th December 2017
41 Maharashtra taxi rules discriminates between black-and-yellow cabs and app-based taxi services: Bombay
HC, Indian Express, 03 August 2017, available at http://indianexpress.com/article/india/maharashtra-taxi-
rules-discriminates-between-black-and-yellow-cabs-and-app-based-taxi-services-bombay-hc-4780461/
42 Urban Transport in India: Challenges & Recommendations, Indian Institute for Human Settlements. The
report is available at http://iihs.co.in/knowledge-gateway/wp-content/uploads/2015/07/RF-Working-
Paper-Transport_edited_09062015_Final_reduced-size.pdf, accessed on 15th December 2017

32
best possible regulatory intervention is selected. The central goal of RIA is to ensure that
laws and rules efficiently produce economic, social, and environmental benefits, that is,
that benefits justify costs. Its process ensures that the assessment is open and
transparent, that the information used is reliable and not biased.
A RIA exercise essentially answers the following questions:
1. What is the problem being solved, and why did it emerge?
2. What will happen if the government does not act?
3. What kinds of actions could be envisaged to address the problem?
4. What are the consequences of possible actions?
5. Why is the proposed solution the best one? Does it best solve the problem by
achieving maximum net benefit?
6. Can the government implement the solution effectively?
To answer these questions, the broad steps implemented in a RIA are: i) understanding
the baseline, i.e. situation on ground and relevant laws and regulations and examining if
regulatory objectives are being fulfilled; ii) assessing the costs of baseline on different
stakeholders. This is followed by designing possible alternatives and estimating the
changes in baseline owing to such alternatives, including estimating changes in costs to
different stakeholders and additional benefits which may be experienced by the
stakeholders. A comparison between different alternatives follows which has the
potential to achieve maximum net benefits to stakeholders in particular, and economy,
society and environment, in general.
Several jurisdictions have benefitted from implementation of RIA. The table below
provides a snapshot of benefits experienced through RIA by different jurisdictions.
Benefits of RIA
Developed and developing countries have increasingly realised benefits of RIA over the
years. A study of 15 RIAs by the US Environmental Protection Agency showed that three
(out of total 15) RIAs increased net benefits to society from recommended
improvements in regulations, by $10 billion. The total cost of preparing all of the 15 RIAs
studied was approximately $10 million. Similarly, removing numerous regulatory
barriers in South Korea was estimated to boost FDI by $26 billion over 5 years.
Moreover, The One-in, Two-out Policy of UK, which mandates removal of £2 of costs for
imposition of £1 of costs via state-led intervention, has resulted in net reduction £836
million in costs to business between 2010 and 2014.
The REACH regulation from the European Commission would have imposed €10 billion
in costs on the European chemicals industry, as it was first written. The regulation was
revised to make it easier to comply, without significantly changing benefits. The final cost
was €2 billion. The RIA cost the Commission about €1 million, producing a social return
on investment of 8,000 to one and saving thousands of jobs. The OECD estimated in
Vietnam that each full RIA is estimated to cost nearly $500 (due to very low labour costs
in the public sector), but the introduction of RIA is expected to save the private sector
100,000 times that amount through a reduced or more efficient regulatory regime. In
Victoria State, Australia, a recent evaluation of RIA showed that between 2005-06 and
2009-10, the RIA process achieved estimated gross savings of A$902 million over the 10-
year life of the regulations. For every dollar invested in the RIA process, gross savings to
the private sector and government of between A$28 and A$56 were identified. Today,
over 65 countries have adopted some form of RIA in making new laws and rules.

33
Implementation of RIA improves overall regulatory quality, by factoring all the relevant
expectations of stakeholders. Rigorous and transparent assessment of costs and benefits
also increases the acceptability of regulation among stakeholders. As a result, there is
greater clarity and predictability in regulatory process.
RIA has been recommended for India by several expert committees. These include the
erstwhile Planning Commission’s Working Group on Business Regulatory Framework (to
which CUTS acted as a Knowledge Partner), Financial Sector Legislative Reforms
Commission, Damodaran Committee Report, the Tax Administration Reform Commission
and the Expert Committee on Prior Permission and Regulatory Mechanism recommended
adoption of RIA in India by central and state governments. The Pre Legislative
Consultation Policy of the Government of India, introduced in 2014, also requires
government departments to conduct partial RIA of proposed legislations.
In order to assess the impact of different provisions of the Rules, RIA appears to be most
suited framework.
RIA in India
Several expert committees and independent studies have highlighted the benefits of RIA
and have recommended its adoption for India. These include erstwhile Planning
Commission’s Working Group on Business Regulatory Framework (WGBRF) (2011),
Financial Sector Legislative Reforms Commission (FSLRC) (2013), Committee for
Reforming the Regulatory Environment for Doing Business in India (2013), Tax
Administration and Reforms Commission (2015), and the Department of Industrial Policy
and Promotion’s Expert Committee on Prior Permissions and Regulatory Mechanism
(2016). The Department of Public Policy and Promotion has recently constituted a ‘Better
Regulation Advisory Group’ to provide recommendations on regulatory reforms required
to attract investments. It is closely reviewing models adopted in different countries to
recommend a model for adoption of RIA in India.
In addition to the expert committees, there has been some awareness and acceptance
within the government on the RIA process. For instance, the Pre Legislative Consultation
Policy of the Government of India highlights the need for estimating the impact of
proposed legislations on key stakeholders. The Financial Stability and Development
Council had decided to adopt implement non-legislative recommendations of the FSLRC,
which include cost-benefit analysis of draft regulations. However, this has met with
limited compliance.
However, CUTS International has significant experience and expertise in conducting RIAs,
generating awareness, and conducting capacity building programmes on RIA for
government and other stakeholders. CUTS’ work on RIA include: highlighting its utility by
conducting RIA case studies in different sectors; undertaking outreach and advocacy
activities; and building capacity of relevant stakeholders on RIA. CUTS has also engaged
with several states and central government departments/ bodies and regulatory agencies
to promote RIA.
Source: http://cuts-ccier.org/ria/
5. Scope of the Report
This report presents findings of a limited RIA exercise conducted by CUTS International
on select provisions of the Rules. Six specific provisions were identified for the purpose of
in-depth assessment: i) minimum engine capacity ii) fleet composition, iii) permit fees; iv)
fuel type; v) PSV badge; and vi) colour standardisation. These provisions were selected as

34
they are likely to have direct and substantial impact on taxi drivers and consumers, and
can provide a broad idea of aggregate impact of the Rules. Also, in light of interest and
expertise of CUTS International and available resources, these provisions have been
selected.
While impact of provisions of the Rules on different stakeholder groups has been
estimated in detail, similar exercise has not been adopted to suggesting recommendations
to improve the regulatory framework under the Rules. Consequently, a complete RIA has
not been carried out to prepare the report.
In order to conduct RIA, a perception survey was undertaken to interact with key
respondents in the Mumbai Metropolitan Region(“MMR”). Structured questionnaires
were administered to 1,000 drivers and 1,000 consumers. Of the sample size of 1000
drivers, 750 drivers were associated with app based taxi aggregators while remaining
250 drivers drove black and yellow taxis. In addition, key informant interviews were
conducted with select representatives of different categories of drivers and owners of
taxis, to better understand costs involved. The exercise also involved in-depth interaction
with different stakeholder groups including government, experts, consumer
representatives, taxi union representatives, academia, among others, to understand their
perspective on the Rules.
In order to assess impact of Rules, an attempt has been made to identify quantitative and
well as qualitative costs and benefits of the Rules on different stakeholders. The
stakeholders include consumers, drivers of taxis linked with app based aggregators,
drivers of B/Y taxis, aggregators, government, and sector experts in the MMR region. In
addition, attempt has been made to conduct preliminary assessment of impact of Rules on
congestion in the MMR region. For consistency purposes, impact on drivers and owners of
taxis has been clubbed and reported as ‘impact on drivers’ in the report.
In addition, given the Rules have not yet been implemented, certain assumptions have
been made and scenarios have been designed at appropriate places to predict impact of
the Rules.
The following chapters of the report are loosely based on RIA methodology. Each chapter
deals with a select provision of the Rule. It begins with understanding the regulatory
proposal and intended objective of the Rules. This is followed by in-depth examination of
the baseline i.e. the prevailing scenario, which the Rules intend to alter. An assessment of
costs and benefits of such potential alteration on different stakeholder groups follows.
After understanding impact on specific stakeholder group, net impact of the Rules is being
examined and attempt has been made to assess if the relevant provision will be in a
position to achieve the desired objective. Each chapter concludes with recommendations
and rationale for the same.
Consequently, each of the chapter below is structured as follows:
1. Regulatory proposal
2. Intended objective
3. Baseline
4. Impact assessment
5. Net impact
6. Recommendations

35
Chapter 2: Minimum Engine Capacity
1. Regulatory Proposal
The Rules provide that taxi attached to any aggregator should have minimum engine
capacity of not less than 980 CC with seating capacity not exceeding seven including
driver.
2. Intended Objective
It appears that this Rule intends to create a level playing field between regulations
applicable to incumbent B/Y taxis and new entrants i.e. taxis linked with app based
aggregator. The preamble to the Rules indicates that currently B/Y taxis are required to
have a minimum engine capacity of 980 CC.
Interactions with stakeholders revealed that taxis with engine capacity more than 980 CC
are expected to provide desired level of comfort to consumers. Such cars are capable of
running on speeds optimal for city riding and also have optimum braking system. The
total seating capacity and power to weight ratio of such cars is expected to be suitable for
intermittent public transport. It was further mentioned that cars with engine capacity less
than 980 CC may not be able to provide the level of comfort expected from a city taxi.
3. Baseline
The principal assumption underlying the Rule is that minimum engine capacity of B/Y
taxis is 980 CC. Drivers of 250 B/Y taxis were interacted with under the project.
Approximately 12 percent such B/Y taxis had engine capacity less than 980 CC. Further,
the report of Khatua Committee noted that approximately 20 percent B/Y taxis currently
operating in Mumbai have engine capacity less than 980 CC.43
Further, in interactions with drivers of 750 taxis linked with app based aggregators,
approximately 99 percent drivers believed that it was unfair to disallow linkage between
taxis with engine capacity less than 980 CC and app based aggregators.
In addition, of 1,000 users of taxis linked with app based aggregators interacted with,
approximately 46 percent reported to have used taxis with engine capacity less than 980
CC. Of such users, overwhelming 99 percent did not face any problem which can be
attributed to low engine capacity while riding such taxis.
43 The Report of the Committee for Determination of the Fare Structure of Taxis and Auto Rikshaws in
Maharashtra State, September 2017, available at
https://transport.maharashtra.gov.in/Site/Upload/GR/Part%201.pdf

36
Figure 2.1 Baseline Scenario of Taxis with engine capacity below 980 CC
* Sample Size – 750 drivers of taxis linked with app based aggregators
** Sample size – 1000 users of taxis linked with app based aggregators
In fact, approximately 41 percent users preferred travelling in compact hatchback taxis (a
substantial number of such taxis have engine capacity less than 980 CC) over other types
of taxis. The key factors considered by users while booking such taxis include availability
of air conditioner, vehicle cleanliness, adequate leg space, and good condition of taxi.
Further, it appears that ‘car noise’ is most likely a cause of discomfort in compact
hatchback taxis.
The survey revealed that users of such taxis appear to be satisfied with the level of
services provided by such taxis. Approximately 41 percent of users prefer compact
hatchback taxis.
Figure 2.2 Usage of taxis with engine capacity less than 980 CC
As per stakeholder interactions, cars with low engine capacity have previously failed to
provide adequate comfort or operate with desired braking system. These were ensured
by cars with engine capacity of at least 980 CC. Consequently, cars with engine capacity of
less than 980 CC have not been permitted to operate for public transport. However, it
appears that with the advent of technology, cars with engine capacity less than 980 CC are
now able to provide adequate comfort, safety and better experience to users, and operate
with desired braking system. For instance, engine capacity of cars such as Chevrolet Beat,
12% of total B/Y Taxis
in Mumbai have
engine capacity less
than 980 CC
99%* of drivers of
taxis linked with app
based aggregators
thought that it was
unfair for regulations
to fix minimum engine
capacity
46%** users of taxis
linked with app based
aggregators have used
taxis with low engine
capacity taxi. 99% of
such users did not face
any problem owing to
such low engine
capacity
54%
41%
5%
46%
Non users of taxis with engine capacity less than 980 cc
Users preferring taxis with engine capacity less than 980 CC
Users not preferring taxis with engine capacity less than 980 CC

37
Datsun Go, Renault Kwid, among others, is less than 980 CC. Nevertheless, such cars
provide services similar to cars with engine capacity more than 980 CC. Thus, it is
reasonable to assume that comfort and the effective braking system is not dependant on
engine capacity.
If such restriction on minimum engine capacity gets implemented, it would not just
restrict the entry of compact hatchback but would also affect various stakeholders. The
impact on various stakeholders has been discussed in next section.
4. Impact Assessment
Impact on consumers
As indicated earlier, some taxis currently linked with app based aggregators have engine
capacity less than 980 CC. If the minimum engine capacity rule becomes operational, such
taxis will no longer be in a position to continue their linkage with app based aggregators.
This may result in reduction in availability of smaller taxis for consumers, despite
potential demand. The average fare and expected time of arrival of remaining smaller
taxis is likely to witness consequent increase.
Table 2.1 Fare Calculation of different segment of Taxis
Fare Calculation
Parameter
Taxi Category
Compact
Hatchback Taxi44
Hatchback
Taxi45
B/Y Taxi
Base Fare 50 70 22 (First 1.5 kms)
Distance (kms) 10 10 10
Rate/ kms 6 8 14.84
Total Ride Time (est.) 30 30 30
Ride time/ min charges 1.5 1 1.48
Total Fare 155 180 193
Source: Author calculation. Figures from https://www.olacabs.com/fares/mumbai accessed on 17th December
2017. Figure of B/Y Taxi from report of Khatua Committee.
Interactions with consumers revealed that approximately 41 percent consumers
preferred compact hatchback category taxis. Maruti Suzuki Alto, Datsun Go, Hyundai Eon,
operate as taxis in this category.46 Such taxis have engine capacity less than 980 CC.
Estimates suggest that average fare for 10 km ride of 30 minutes in Mumbai by using this
segment of taxis is approximately INR 25 lesser (exclusive of taxes) than immediately
higher category i.e. regular hatchback taxis, wherein taxis have engine capacity of more
than 980 CC.47
Further, estimates suggest that average fare for 10 km ride of 30 minutes in Mumbai for
compact hatchback taxi segment is INR 155 and hatchback taxi segment is INR 180.
44 See fares for micro category at https://www.olacabs.com/fares/mumbai accessed on 17th December 2017
45 See fare for mini category at https://www.olacabs.com/fares/mumbai accessed on 17th December 2017
46 https://www.olacabs.com/, accessed on 17th December 2017
47 https://www.olacabs.com/fares/mumbai accessed on 17th December 2017.

38
Consequently, consumers would need to pay approximately INR 25 extra for a similar ride
with hatchback taxis linked with app based aggregators.
Figure 2.3 Difference in fare for different segment of
Taxi with respect to Compact Hatchback Taxi
Similarly, if a consumer chooses to ride a B/Y taxi owing to unavailability of compact
hatchback category taxis, s/he might need to pay approximately INR 38 extra for a lesser
comfortable ride. B/Y taxis typically do not provide the level of comfort provided by a
compact hatchback category taxi.
In addition, approximately 28 percent of consumers cited low fare and negligible wait
time as key reasons for preferring such compact hatchback taxis linked with app based
aggregators. An increase in fare and wait time might cause inconvenience to consumers.
Approximately 80 percent consumers interacted with have previously opted for an
alternate mode of transport over taxis linked app based aggregator because of high
estimated fare. Approximately 51 percent consumers opted for public transport (buses/
train). Such shift in mode of transport might degrade comfort in commuting and
consequently cause inconvenience to commuters.
Estimates suggest that average fare for 10 km ride of an air conditioned (AC) bus in
Mumbai is INR 35.48 This is INR 120 less than average fare for 10 km ride in Mumbai by
compact hatchback taxi, being INR 155. In other words, consumers are willing to pay at
least INR 120 extra to avail AC taxi services. Despite such willingness to pay extra, in case
AC taxi services are not available and consumers are forced to shift to AC buses, they are
likely to bear inconvenience cost worth INR 120.
48 Rates of regular tickets, daily bus pass and periodical bus passes with effect from 1st July 2016 are available
at http://bestundertaking.com/pdf/farerevisionjuly2016-english.pdf
35
155 155 155
25 25
13
0
50
100
150
200
250
AC Bus Compact Hatchback Taxi Hatchback Taxi B/Y Taxi
Total
hike
in
fare
INR
25
Total
hike
in
fare
INR
38
Total
Fare -
155
Total Fare -
180
Total
Fare -
193Total
Fare
- 35
Willin
genes
s to
pay
for
taxi
comfo
rt INR
120

39
Approximately 15 percent users preferring taxis with engine capacity less than 980 CC
comprised students, home makers and unemployed, i.e. they do not have a direct source
of income. It is reasonable to assume that this category will be adversely impacted should
taxis with engine capacity less than 980 CC are not allowed to link with app based
aggregators.
Impact on taxi drivers
In case minimum engine capacity requirement is implemented, some of the taxis currently
operating with engine capacity less than 980 CC will no longer be in a position to continue
their linkage with app based aggregators. This would have a direct and adverse
consequence on the income of drivers of such taxis.
Interactions with drivers of taxis linked with app based aggregators revealed that average
daily income of approximately 79 percent of such drivers was in the range of INR 2000 –
INR 2500. In addition, approximately 97 percent of drivers worked for at least 25 days in
a month.
Consequently, the total revenue foregone in a month by a driver, owing to inability to link
taxi with app based aggregators, is estimated to be in the range of INR 50,000 – INR
62,500. Thus, the total annual revenue foregone by one such driver would be in the range
of INR 6,00,000 – INR 7,50,000. In addition, the interactions revealed that the average
daily savings of one such driver is approximately INR 1,000. Consequently, monthly loss
of savings for one such driver would be approximately INR 25,000 and annual loss in
savings for one such driver is expected to be INR 3,00,000.
Drivers of taxis with engine capacity less than 980 CC have experienced an increase in
income after associating with app based aggregators. It is reasonable to assume that such
drivers would experience a decline in income if they are not allowed to continue their
association with app based aggregators.
Compact
Hatchback
Taxi
B/Y Taxi
Hatchback
Taxi
AC BusInconvenience
cost – INR 120
Extra fare –
INR 25
Extra fare – INR 38

40
Further, a significant proportion of such drivers are likely to be owners of taxis with
engine capacity less than 980 CC. Presumably; these cars were procured on loan with the
objective of linking with app based aggregators for intra-city travel. In addition to
repayment of loan availed for procurement of taxis, the owners of cars will need to incur
cost of repair and maintenance, and pay insurance premium and taxes. Estimates suggest
that such daily fixed cost for taxis with engine capacity less than 980 CC is approximately
INR 581.32.
Per day cost incurred by taxi owners
S. No Cost heads Engine capacity of taxi less than
980 CC (INR)
1 Cost 4,00,000
2 Permit Fee 1,500
3
Interest (10%) and processing cost (2%)
on loan for 5 years on 1 + 2
1,18,371
4 Cost of repair and maintenance for 5 years 3,38,88049
5 Cost of insurance and taxes for 5 years 1,62,16550
6 Additional tax 40,00051
7 Cost for five years (life of car) (SUM (1:6)) 10,60,916
8 Per day cost (7 /5 years / 365 days) 581.32
It might be reasonable to assume that such taxis with low engine capacity are not suitable
for inter-city travel. Sedan taxis are most suited and preferred by users for long distances
inter-city travel. Therefore, there may be a possibility that such owners/ drivers would
not be able to do intercity business on All India Tourist Permit (AITP) permit. In such
situation, such owners/ drivers would not just lose employment opportunity but will still
need to bear significant fixed cost of the car.
In addition, the restriction is expected to create artificial entry barrier for potential
drivers interested to link taxi having engine capacity less than 980 CC with app based
aggregators. To such extent, potential drivers would suffer loss of a source of income.
As a result of the restriction, while taxis with engine capacity less than 980 CC will not be
able to operate with app based aggregators, it may be reasonable to assume that demand
for taxis with engine capacity between 980 CC – 1400 CC will increase.52 As a result,
drivers of such vehicles may experience increase in income. Similarly, the demand for B/Y
taxis may rise, consequently resulting in increase in income of drivers of B/Y taxis.
Impact on aggregators
As indicated earlier, the reduction in taxis with engine capacity less than 980 CC may
prompt users to move to taxis of higher segment and/or other modes of transport. Should
consumers shift to higher segment of taxis linked with aggregators, the demand for higher
segment of taxis would increase. In such situation, it is expected to boost revenues of
drivers of such taxis and consequently the app linked aggregators.
49 Annual cost of repair and maintenance is INR 67776*5 years. For details, see Part II of the Khatua
Committee Report
50 Annual cost of insurance and taxes is INR 32433*5 years. For details, see Part II of the Khatua Committee
Report
51 INR 2000 per seat * 4 seats * 5 years
52 This assumption is reasonable as most taxi aggregators club taxis with less than engine capacity of 1200 CC
under one group.

41
To the contrary, shift to other modes of transport is expected to result in aggregators
foregoing revenues which were earned through taxis with engine capacity less than 980
CC. While, it is reasonable to assume that the shift would be largely dependent on the
profile and income of consumers but interaction with stakeholders suggest that majority
of consumers are likely to opt for public transport over costlier higher segment of taxis.
Impact on government
The Rules provide for permit fee of INR 25,000 for taxis with engine capacity less than
1400 CC. To the extent taxis with engine capacity less than 980 CC are not permitted to
continue their linkage with app based aggregators, the government is expected to forego
potential revenue in form of permit fees. In addition, the government would not be able to
generate revenue through commercial road tax imposed on such taxis, and mandatory
annual fitness test of vehicle etc.
Owing to unavailability of taxis with engine capacity less than 980 CC, consumers are
likely to shift to AC buses. Estimates suggest that average fare for 10 km ride by one
consumer of an AC bus in Mumbai is INR 35.53 Consequently, the revenue generated by
government through operating public transport services such as buses is likely to
increase. At present, the government is incurring a daily loss of INR 6,014 to operate one
bus.54
However, owing to consumer shift, the pressure on intermittent public transport in the
city is likely to increase. Interactions with stakeholders revealed that there is shortage of
such transport options in the city. Consequently, the government will need to make
substantial investments to ensure public transport services meet the increased demand.
Impact on congestion
As on 31 March 2016, the total number of cars55 per lakh population in Greater Mumbai
region56 was approximately 4,579.57 The population density of the city is extremely high,
approximately 20, 482 persons per square kilometre.58 Further, in Mumbai,
approximately 70 percent of cars on road are single occupancy vehicles.59
To the extent taxis with engine capacity less than 980 CC are replaced by bigger taxis, the
congestion and traffic is expected to worsen in the city. At present, one car covers around
15 square meters of space. In addition, estimates suggest that a car requires approximate
three parking spaces thus requiring around 45 square meters of parking space. Parking at
an off-street space is likely to increase congestion. To the extent consumers shift to buses
owing to unavailability of taxis with engine capacity less than 980 CC, the congestion is
likely to decrease, as a bus is expected to carry more passengers when compared with
passengers carried by multiple cars aggregately occupying similar space.
53 Rates of regular tickets, daily bus pass and periodical bus passes with effect from 1st July 2016 are available
at http://bestundertaking.com/pdf/farerevisionjuly2016-english.pdf
54 https://www.firstpost.com/fwire/best-buses-running-into-losses-of-over-rs-2-cr-every-day-finds-rti-
2376854.html and http://www.thehindu.com/news/cities/mumbai/in-the-red/article18344667.ece,
accessed at 15 May 2018
55 Cars comprise cars, jeeps, meter fitted taxis and luxury/tourist cabs
56 Greater Mumbai region comprise Mumbai Central, Mumbai West, Mumbai East and Borivali
57 Total number of cars, as defined, being 977831 and total population being 21357000
58 http://indiapopulation2017.in/population-of-mumbai-2017.html, accessed on December 17, 2017
59 See Para 5.3.1 of Khatua Committee report on page no. 95

42
5. Net Impact
In case the minimum engine capacity requirement comes into force, it is reasonable to
presume that majority of consumers are likely to shift to either of the available modes of
transport such as: AC buses, hatchback taxis and B/Y taxis. The table below highlights the
aggregate and net impact on each of the stakeholder categories in each of these scenarios.
Stakeholders AC Buses
Hatchback
Taxis
B/Y Taxis
Net impact
per
stakeholder
Consumers
Costs
Inconvenience
cost - INR 120
per trip* i.e. INR
240 per day*** X
0.95
(probability) =
228/ 3= 76
Additional fare
- INR 25 per
trip* i.e. INR
50 per day***
X 0.95
(probability)
= 47.5/ 3 =
15.83
Additional fare
- INR 38 per
trip* and
Inconvenience
i.e. INR 76 per
day*** X 0.95
(probability)
=72.2 /3 =
24.06
Negative.
INR – 115.90
per day60
Benefits - - -
Drivers
Costs
Of Taxis with
engine capacity
less than 980CC:
Savings foregone
= INR 1000 per
day X 0.95
(probability) =
950/ 3= 316.67
Of Taxis with
engine
capacity less
than 980CC:
Savings
foregone
= INR 1000
per day X 0.95
(probability) =
950/ 3=
316.67
Of Taxis with
engine capacity
less than
980CC:
Savings
foregone
= INR 1000 per
day X 0.95
(probability) =
950/ 3= 316.67
Negative.
INR – 713.77
per day
Benefits N.A
Of hatchback
taxis: Revenue
of INR 180 per
new** trip* i.e.
INR 360 per
day*** X 0.95
(probability) =
342/ 3= INR
114
Of B/Y taxis:
Revenue of INR
193 per new**
trip* i.e. INR
386 per day***
X 0.95
(probability) =
366.70/ 3 = INR
122.23
Bus
Costs N.A N.A N.A
Positive.
INR
22.16 per
day61
Benefits
Revenue per
consumer per
trip*: INR 35 i.e.
INR 70 per
day***/ 3 =
23.33 *0.95 =
22.16
N.A N.A
Aggregators Costs
Revenue is likely
to reduce -
INR 31 per trip
**** = INR 62
-
Revenue is
likely to reduce.
INR 31 per trip
**** = INR 62
Negative.
INR
60 (228+47.5+72.2)/3 (probability) = INR 115.90 per day
61 INR 70/ 3 (probability) = INR 23.33

43
Stakeholders AC Buses
Hatchback
Taxis
B/Y Taxis
Net impact
per
stakeholder
per day * 0.95 =
58.90/ 3 = 19.63
per day * 0.95 =
58.90 / 3 =
19.63
- 36.10 per
day62
Benefits -
Revenue is
likely to
increase.
INR 5 per trip
***** =INR 10
per day *.95 =
9.5/ 3 = 3.16
-
Aggregate impact on all
stakeholders
INR
- 390.14 per
day
INR – 215.34
per day
INR – 238.13
per day
Negative.
INR
- 843.61 per
day
*Trip means a 10 km trip in MMR region
**New trip means additional trip by hatchback and B/Y taxis to fill the void created by
compact hatchback taxis exiting the market
*** It has been assumed that one consumer takes at least one round trip in a day, i.e. two
trips – from source to destination and back.
**** Assuming that aggregators earn 20 percent of per trip fare and per trip fare for
compact hatchback taxi is INR 155.
***** In case consumer shifts from a compact hatchback taxi to a hatchback taxi, the
increase in fare per trip is estimated to be INR 25. Consequently, the aggregators are
expected to earn additional revenue of INR 5 (20% of fare) per trip.
It can be deduced that the net impact of minimum engine capacity requirement is likely to
be negative i.e. costs estimated to be imposed by the requirement are likely to outweigh
the potential benefits. It might be recalled that one of the key intended objectives of the
requirement was to ensure user comfort and safety. Consequently, the Rules intended to
prohibit linkage of taxis with engine capacity less than 980 CC with app based
aggregators.
Such Rule may further restrict technological innovations, and might prove to be
detrimental for the sector in the long run. As indicated earlier, with improvement in
technology, cars with engine capacity less than 980 CC are in a position to provide
comfort and security of a level of car of immediately higher segment.
Since, it is reasonable to assume that, the comfort and safety provided by other modes of
public transport, including B/Y taxis is lesser, when compared with cars with engine
capacity less than 980 CC. Therefore, if the requirement becomes operational, consumers
who shift to immediately higher segment are expected to pay a higher fare for a
substantially similar level of comfort and safety. Consequently, users which shift to such
modes of transport are likely to experience reduction in comfort and security. Thus, it
appears that the minimum engine capacity requirement will not be able to fulfil its
intended objective.
62 (62+62-10)/3 = INR 38 per day *0.95 = 36.10

44
6. Recommendations
As indicated earlier, many states in the country have formulated regulatory framework to
regulate app based aggregators. These include rules issued by the Haryana government
for its districts in the NCR,63 Karnataka,64 Rajasthan65 and West Bengal.66 Some states like
Madhya Pradesh have issued draft regulations and are in the process of finalising the
regulations. Interestingly, the rules issued by Governments of Haryana and Delhi67
provide that minimum engine capacity of taxis linked with app based aggregators should
be 600 CC. In other words, these governments acknowledge that cars with engine capacity
between 600 CC and 980 CC are capable of providing adequate safety and comfort to
users.
However, it appears that engine capacity alone might not be sufficient to determine user
safety and comfort. The Regulatory Committee of City of Edinburgh Council has replaced
the restriction on engine capacity with one on ‘Power to Weight’ ratio of the car. The taxis
would now be assessed on the basis of the manufacturer’s original weight and brake
horsepower specification. The minimum value was set to be 0.0648 horsepower per kg.68
In other words, engine capacity needs to be viewed in consonance weight of the car and
braking power. A light weight car may provide adequate comfort even with low engine
capacity if the braking power is adequate. Taxis such as Hyundai Eon and Maruti Alto
have engine capacity less than 980 CC but have a higher power to weight ratio as
prescribed by regulatory committee in the city of Edinburgh. ‘Power to Weight’ ratio of
these taxis is 0.076 horsepower per kg and 0.066 horsepower per kg respectively.
Consequently, despite running on low engine capacity, such taxis appear to be in a
position to provide adequate comfort and security, and meeting regulatory objective.
It would thus be unfair if such taxis are not allowed to link with app based aggregators
despite conforming to regulatory objective. As indicated earlier, the minimum engine
capacity condition might result in decrease in supply to vehicles and higher fares for
consumers, given the higher average fares for taxis of higher segments. If consumers are
unable to afford such higher fares, they might shift to other modes of transport.
2016, available at
http://www.transport.rajasthan.gov.in/content/dam/transport/transport-
67 The City Taxi Scheme, 2015 issued by Government of NCT of Delhi is available at
JPERES&lmod=-370276847
68 In Schedule B: Conditions of Fitness of Private Hire Cars delete wording of current condition 244 and
replace with the following ‘ The vehicle must have an engine capacity with a ‘Power to Weight’ ratio equal to
or greater than 0.0648 hp per kg’. https://consultationhub.edinburgh.gov.uk/sfc/change-to-licensing-
conditions-for-taxis-and-phc/ accessed on 17 December 2017.The Licensing conditions for the Taxi and
private hire cars in Edinburgh City could be accessed at
http://www.edinburgh.gov.uk/download/downloads/id/3812/taxi-phc_licence_-_standard_conditions.pdf,
page 69

45
Similar regulatory restrictions creating artificial barriers on operating conditions and
inflating cost for ultimate consumers exist in other countries as well. Countries such as
Ireland, Netherlands, Sweden and the United Kingdom have removed or loosened entry
restrictions on taxis.69 This is expected to result in reduction in ETA and increased
consumer satisfaction.70 Furthermore, in major cities in New Zealand and Ireland, the
numbers of taxis more than tripled following the adoption of an open entry policy.71
In light of the above, following recommendations are made:
1. The restriction on minimum engine capacity is rationalised to allow taxis with engine
capacity of 600 CC and above to link with app based aggregators.
2. However, the above should be an interim measure and better alternatives to ensure
consumer safety and comfort, such as prescribing power to weight ratio, should be
explored. The costs of such alternatives should thoroughly studied and only such
alternative which has the potential to meet regulatory objectives at least cost should
be adopted. The design and cost-benefit analysis of alternatives should be done in a
transparent manner through structured stakeholder consultation.
69 OECD Reports(https://www.itf-oecd.org/sites/default/files/docs/app-ride-taxi-regulation.pdf;
http://www.oecd.org/regreform/sectors/41472612.pdf)
70 Fingleton, Evans, and Hogan (1997), The Dublin Taxi Market: Re-Regulate or Stay Queuing? Dublin: TCD
Department of Economics.
71 Fingleton, Evans, and Hogan (1997), The Dublin Taxi Market: Re-Regulate or Stay Queuing? Dublin: TCD
Department of Economics.

46
Chapter 3: Fleet Composition
The Rules provide that at least 30 percent of taxis linked with app based aggregators must
have engine capacity of 1400 CC and more.
Currently, high end taxis with engine capacity of 1400 CC and more are predominantly
operated under the Fleet Taxi Scheme, 2006, Phone Fleet Taxi Scheme, 2010, and Call Taxi
Scheme 2010 (Previous Taxi Schemes). The objective of such Taxi Schemes was to
provide effective, convenient, reliable, comfortable and efficient taxi service, which was
not provided by prevailing city taxi services.72
It appears that objective of the Rules was to facilitate optimum competition between high
end taxis operating under Previous Taxi Schemes and similar taxis linked with app based
aggregators. The Rules also provide that operators of taxis under the Previous Taxi
Schemes shall be deemed to be aggregators under the Rules. Any permit granted/ used
for vehicle operating under such Previous Taxi Schemes, subject to payment of fee as
prescribed under the Rules, shall be deemed to be a permit granted under the Rules.
Interactions with stakeholders revealed that such high end taxis are predominantly hired
to travel with luggage to/ from points of outstation travel (such as railway station,
airport). The Rules also intended to ensure that such high end taxis continue to remain
economically viable for their operators.
3. Baseline
According to the Motor Vehicles Department, Government of Maharashtra (MVD), the
total number of luxury/ tourist cabs as on 31 March 2017 in Greater Mumbai region
(comprising Mumbai Central, Mumbai West, Mumbai East and Borivali) was 59,917.73 This
number increased to 63,330 by 31 October 2017.74 Luxury/ tourist cabs include taxis
linked with app based aggregators. The compounded annual growth rate (CAGR) of
luxury/ tourist cabs in Greater Mumbai region, since their launch in 2007-2008 up to
2013-14 was 7.62 percent. For the period 2013-14 to 2016-17, the CAGR witnessed
exponential increase to 66.33 percent. In 2013-14, app based aggregators launched their
services. Consequently, the rise in number of luxury/ tourist cabs can be reasonably
attributable to app based aggregators.
If the app based aggregators had not launched their services, it is reasonable to assume
that the sector would have continued to grow with CAGR of around 7.62 percent. In such
scenario, the total number of luxury/ tourist cabs operating in Greater Mumbai region by
31 March 2017 would have been around 17,141 only. Plausibly, the taxis exceeding this
number would have not been operational but for app based aggregators. Consequently, it
might be reasonable to assume that the total number of taxis linked with app based
aggregators as on 31 March 2017 was around 42,776.75
72 https://transport.maharashtra.gov.in/1116/Fleet-Taxi-Scheme-2006?format=print, accessed on 16th
December 2017
73 Category wise and Office wise Motor Vehicle Population as on March 2017, available at
https://transport.maharashtra.gov.in/Site/Upload/GR/Vehicle%20on%20road%20as%20on%2031%20mar
ch%2017%20prov.pdf
74 As per the data provided by MVD
75 59,917 – 17,141

47
Figure 3.1 Growth of luxury/ tourist cabs in Greater Mumbai Region
* Total number of tourist/ luxury cabs is extracted from MVD data. The split between taxis
linked with app based aggregators and other taxis has been estimated
** CAGR of tourist/ luxury cabs from fiscal 2008 – 2014 is 7.62 percent. CAGR of tourist/
luxury cabs from fiscal 2014 – 2017 is estimated at 66.33 percent. Consequently, CAGR of
tourist/ luxury cabs from fiscal 2008 – 2017 is estimated to be 23.67 percent.
*** Projected values based on: i) CAGR of all tourist/ luxury cabs of 23.67 percent; ii) CAGR of
tourist/ luxury cabs (not linked with app based aggregators) of 7.62 percent
The number of taxis with engine capacity more than 1400 CC within total taxis linked
with app based aggregators is not available in public domain. However, review of
literature and interactions with stakeholders revealed that the ratio of taxis with engine
capacity less than 1400 CC to taxis with engine capacity more than 1400 CC is 25:1. The
Khatua Committee also observed that the share of ridership of more than 1400 CC engine
capacity vehicles is less than 5 percent.76 It further noted that according to car
manufacturers, around 7 to 10 percent consumers use cars with engine capacity more
than 1400 CC.
Such observations were validated during interactions with stakeholders, wherein of total
taxis linked with app based aggregators, approximately 4 percent had engine capacity
more than 1400 CC. In this light, the rationale for requiring at least ‘30 percent’ taxis
linked with app based aggregators to have engine capacity more than 1400 CC was not
clear. It may be noted that the previous draft of the Rules had fixed such minimum
percentage at ‘50 percent’.77
It is reasonable to assume that at present the taxis linked with app based aggregators with
engine capacity more than 1400 CC would be approximately 5 percent of total taxis i.e.
2,139. Thus, the total number of taxis linked with app based aggregators below 1400 CC
would be around 40,637 (95 percent of total taxis linked with app based aggregators).
76 See para 5.5 of Khatua Committee Report for Determination of the Fare Structure of Taxis and Auto
Rickshaws in Maharashtra State on page no 98
77 CUTS comments on Draft Maharashtra City Taxi Rules, 2016 are available at http://www.cuts-
ccier.org/pdf/Advocacy-DRAFT-MAHARASHTRA-CITY-TAXI-RULES-2016.pdf, accessed on 15th December
2017

48
Figure 3.2 Total No. of taxis linked with app based aggregators
The key factors considered by users while booking their preferred app linked taxis are:
fare; expected time of arrival (ETA); leg space; and driver rating. These factors remain
constant despite change in users of different segments78 of taxis. In other words, it
appears that users of app linked taxi are satisfied with the quality of services provided by
taxis of their preferred segment.
Figure 3.3 Factors* considered by users while booking
taxis linked with app based aggregators
* Users consider multiple factors at a time while booking taxis
Further, approximately 86 percent of drivers linked with app based aggregators revealed
that the existing fleet composition was in line with consumer demand for taxis. As
mentioned earlier that the objective for such Rule is to protect the interest of drivers with
taxi having engine capacity more than 1400 CC. On the contrary, such drivers consider
that it was not fair for the government to determine fleet composition.
Interaction with drivers revealed that while total number of taxis with engine capacity
more than 1400 CC is miniscule but no additional protection is required. Further, less
than 1 percent of consumers reported to prefer SUV/ MUV taxis. Approximately 96
percent of consumers felt that there was no shortage of SUV taxis.
78 Taxis are typically segmented based on the applicable fare. Usually, applicable fare for hatchback taxis is
less than that for mid-size sedan or sports utility vehicles.
4277
6
Total number of users – 797 Total number of users – 197

49
Interactions with stakeholders revealed that many taxis linked with app based
aggregators having engine capacity less than 1400 CC such as Maruti Swift Dzire, Tata
Tigor, Hyundai Xcent, and Honda Amaze etc. provide good user experience. The level of
comfort provided to the consumers by such cars is similar to that provided by cars with
engine capacity more than 1400 CC. These cars also provide adequate luggage space and
thus meet the use case of travelling to/from point of outstation travel. It appears that such
cars are economically viable to drivers than cars with engine capacity more than 1400 CC.
4. Impact Assessment (Scenario Analysis)
In order to gauge impact of fleet composition requirement, the following four scenarios
have been projected, with respect to the total app linked taxis as on 31 March 2018:
Figure 3.4 Probable Scenario of Taxis linked with App based
Aggregators in 2018, if Rules come into force
86% of drivers
revealed that fleet
composition in line
consumer demand
Drivers of taxis with
than 1400 CC thought
that government
should not decide fleet
composition
96% consumers stated
that there is no
shortage of SUVs while
booking app based
taxis
40637
52869
40637 38956
44415
4990
2139
2783 17416
16696
19035
2139
42776
55652
58053
55652
63450
7129
0
15000
30000
45000
60000
75000
2017 Normal growth Scenario 1 Scenario 2 Scenario 3 Scenario 4
Taxis having engine capacity less than 1400 CC
Taxis having engine capacity more than 1400 CC
Total taxis linked with app based aggregators

50
Total B/Y taxis as on 31 March 2017 were 55,343. The CAGR of B/Y taxis during fiscal
2008 – 2017 was 1.36 percent. Assuming that the CAGR remains same, total B/Y taxis as
on 31 March are estimated to be 56,096.
Scenario 1: If the total taxis with engine capacity less than 1400 CC remain constant
As on 31 March 2018, total taxis linked with app based aggregators having engine
capacity less than 1400 CC remains 40,637 i.e. such taxis as on 31 March 2017. In order to
comply with fleet composition requirement, total taxis linked with app based aggregators
will need to be at least 58,053 as on 31 March 2018. Consequently, total taxis linked with
app based aggregators having engine capacity more than 1400 CC are required to be to be
at least 17,416 as on 31 March 2018.
Scenario 2: If the taxi sector grows at the CAGR observed since 2008
The CAGR of tourist/ luxury cabs in Greater Mumbai region for 2008-2017 period is
estimated to be 23.67 percent, owing to entry of app based aggregators in 2013-14.
Assuming the growth continues at same rate, total taxis linked with app based
aggregators as on 31 March 2018 are projected to be 55,652.79 Consequently, to comply
with fleet composition requirement as per the Rules, total taxis linked with app based
aggregators having engine capacity less than 1400 CC are estimated to be 38,956.
Therefore, total taxis linked with app based aggregators having engine capacity more than
1400 CC are estimated to be 16,696.
Scenario 3: If taxis linked with app based aggregators increase at average growth
experienced since 2014
The average annual growth of taxis linked with app based aggregators in Greater Mumbai
region (fiscal 2015 – 2017) has been estimated to be 20,674.80 Assuming growth in fiscal
2018 remains same, total taxis linked with app based aggregators as on 31 March 2018
are projected to be 63,450.81 Consequently, to comply with fleet composition
requirement, total taxis linked with app based aggregators having engine capacity less
than 1400 CC are estimated to be 44,415. Therefore, total taxis linked with app based
aggregators having engine capacity more than 1400 CC are estimated to be 19,035.
Scenario 4: If total taxis with engine capacity more than 1400 CC remain constant
We assume that total taxis linked with app based aggregators having engine capacity
more than 1400 CC does not change from 31 March 2017, and remains at 2,139. In order
to comply with fleet composition requirement, total taxis linked with app based
aggregators are estimated to be not more than 7,129 as on 31 March 2018. Consequently,
total taxis linked with app based aggregators having engine capacity less than 1400 CC
are estimated to be not more than 4,990 as on 31 March 2018.
Set out below are potential impacts on different stakeholders under projected scenarios.
79 See figure 3.1 for details
80 See figure 3.1. The growth in fiscal 2016 is 19873 (21301 – 1428) and fiscal 2017 is 21475 (42776 –
21301). Consequently, the average growth is 20674 (19873+21475/2)
81 42776 + 20674

51
Scenario 1: The total taxis with engine capacity less than 1400 CC remain constant
Impact on consumers
As per this scenario, additional 15,277 taxis with engine capacity more than 1400 CC are
expected to be linked with app based aggregators. Thus, the availability of such taxis for
consumers preferring high end taxis is expected to increase. Consequently, the estimated
wait time for consumers is expected to decrease. This may result in reduction in fare of
taxis with engine capacity more than 1400 CC. Fare and estimated time of arrival are two
most important factors which consumers consider while booking app based taxi.
Approximately 87 percent of consumers mentioned fare as one of the most important
option while approximately 62 percent considered estimated time of arrival as one of the
most important option.
However, according to interactions with stakeholders, consumers preferring high end
taxis with engine capacity more than 1400 CC constitute a miniscule proportion and a
significant proportion of consumers prefer taxis low and mid segment taxis with engine
capacity less than 1400 CC. Given that number of such low and mid segment taxis are not
expected to witness increase despite presumable increase in demand, the estimated wait
time for such taxis is likely to increase. In addition, fare of such taxis might witness an
upward pressure. Such upward pressure is expected to be countered by potential
reduction in fare of taxis with engine capacity more than 1400 CC, owing to substantial
increase in supply.
Even with the infusion of significant number of high end taxis in the market, it seems
unlikely that large number consumers would shift to such taxis. This is primarily because
fare of SUV taxi is significantly higher than other segments of taxis. In addition, owing to a
high capital cost for a such taxi, the fare is not expected to fall beyond a certain threshold
in spite of increase in supply.
Table 3.1 Comparison of Fare of different segment of
Taxi linked app based aggregators
Fare Calculation Parameter Taxi Category
Compact
Hatchback Taxi
Hatchback
Taxi
SUV Taxi B/Y Taxi
Base Fare 50 70 150 22 (First
1.5 kms)
Distance (kms) 10 10 10 10
Rate/ kms 6 8 17 14.84
Total Ride Time (estimate) 30 30 30 30
Ride time/ min charges 1.5 1 2 1.48
Total Fare 155 180 380 193
Source: Author calculation. Figures extracted from https://www.olacabs.com/fares/mumbai
accessed on 17th December 2017. Figure of B/Y Taxi from report of Khatua Committee.

52
Consequently, even if fare of SUV taxis witnesses a reduction, such fare is expected to
remain considerably higher than the fare of lower segment of taxis linked with app based
aggregators.
Consequently, it appears that upward pressure on fare of taxis with engine capacity less
than 1400 CC is likely to outweigh the downward pressure created by increase in number
of taxis. Consumers who might not be in a position to afford such taxis are likely to shift to
alternate mode of transport, such as public transport and B/Y taxis. Shifting to other
modes of transport might result in increase in inconvenience and reduction in comfort for
consumers.
Estimates suggest that average fares of B/Y taxis are higher than average fares of taxis
with engine capacity less than 1400 CC (table 3.1). The difference in fares can typically
range from approximately 782-25 percent.83 Consequently, users are expected to shift to
B/Y taxis only if fares of taxis with engine capacity less than 1400 CC rise above average
fares of B/Y taxis.
Impact on drivers
Approximately 45 percent drivers of taxis with engine capacity more than 1400 CC also
own the taxi. Approximately 61 percent of such taxis were purchased after 2014.
Therefore, it is reasonable to assume that such individuals had procured the taxi for
linking with app based aggregators. Such taxis are most likely to be procured on loan, to
be repaid on periodic basis with interest. As indicated earlier, given the substantial
increase in taxis with engine capacity above 1400 CC, the fare of such taxis are likely to
reduce. This may adversely impact income of owners of taxis and delay the breakeven.
The income of drivers of taxis may also be adversely impacted.
Under scenario 1, it is reasonable to assume that additional cars with engine capacity
more than 1400 CC will need to be procured. Each such new car is expected to cost at
least INR 9,00,000.84 Such cars are most likely to be procured on loan, to be repaid on
periodic basis with interest. However, as indicated in earlier section, infusion of high end
taxis may not attract considerable amount of consumers, thus such drivers would not be
able to generate enough revenue to make repayments within reasonable period, and may
be left with under-utilised assets.
As indicated above, the fare of taxis with engine capacity less than 1400 CC are likely to
increase owing to supply of taxis not matching the increase in demand. This may increase
the revenue of drivers of such taxis. To the extent consumers shift to B/Y taxis, drivers of
such taxis might also experience an increase in revenue.
As indicated earlier, additional 15,277 taxis with engine capacity more than 1400 CC are
required to be linked with app based aggregators, to comply with fleet composition
requirement under the Rules. In case such taxis are not available, the application for
license by aggregators might be rejected by the licensing authority. This may adversely
impact viability of taxi aggregation business.
82 Difference of average fare between hatchback taxi and B/Y taxi
83 Difference of average fare between compact hatchback taxi and B/Y taxi
84 See para 5.21.1 at pg 115 of Khatua Committee Report

53
On procurement of each car of engine capacity above 1400 CC, GST of 28 percent is
expected to be levied. Consequently, INR 2,24,000 as GST is expected to be collected by
the government on each such sale, exclusive of registration and other fees. However, in
order to manage increase in pressure on public transport system, it will need to make
substantial investment.
A significant increase in number of taxis with engine capacity more than 1400 CC is
expected to disproportionately increase the number of cars per lakh population in Greater
Mumbai region. This increase will also be witnessed in the ratio of cars per km road
length. This is expected to increase congestion and put strain on infrastructure of the
Greater Mumbai region.85 Given that the average length of taxis with engine capacity more
than 1400 CC is more than taxis with lesser engine capacity, such strain on resources may
be higher than usual.
Scenario 2: The taxi sector grows at the CAGR observed since 2008
Impact on consumers
Despite increase in total market size of taxis linked with app based aggregators from
42,776 to 55,652 taxis, 1,681 taxis with engine capacity less than 1400 CC are expected to
exit the app based aggregator platform. At the same time, 14,557 taxis with engine
capacity more than 1400 CC are expected to associate with app based aggregators.
Given that the number of taxis with engine capacity less than 1400 CC (the most preferred
taxi segment) will not increase in response to its demand, but is likely to decrease,
consumers are expected to experience significant shortage of such taxis. This is expected
to significantly increase waiting time for consumers and the instances of dynamic pricing.
This would further significantly increase the average fares of such taxis.
However, increase in number of taxis with engine capacity more than 1400 CC is expected
to fill some of the void created by decrease in taxis with engine capacity less than 1400
CC. Significant increase in taxis with engine capacity more than 1400 CC is expected to put
downward pressure on prices. As indicated earlier, estimates suggest that average fare for
10 km ride of 30 minutes in Mumbai for taxis with engine capacity more than 1400 CC is
approximately INR 200 higher (exclusive of taxes) when compared with for taxis with
engine capacity less than 1400 CC.86
To the extent such consumers are unable to afford increase in average fares of taxis with
engine capacity less than 1400 CC or traditionally higher fares of taxis with engine
capacity more than 1400 CC, they are expected to shift to other modes of transport, such
as B/Y taxis, buses, autos, among others. However, a shift to B/Y taxis is likely to happen
only when average fares of taxis less than 1400 CC rise above the average fares of B/Y
taxis. This would require increase in average fares of taxis with engine capacity less than
1400 CC in the range of INR 13-38, depending on the segment of taxis.
85 As per the Economic Survey of Maharashtra 2016-17, as on 01 January 2017, there were 24,441 vehicles
per lakh population and 98 vehicles per km road length in the state.
86 See table 1. Also, see https://www.olacabs.com/fares/mumbai accessed on 17th December 2017. The fare
for taxis with engine capacity above 1400 CC is estimated to be around INR 380 while the fare for taxis below
such capacity is estimated to be around INR 180

54
Further, interactions with stakeholder revealed that there is shortage of public transport
and intermediate public transport in the city of Mumbai. Therefore, it is reasonable to
assume that this would aggravate the discomfort and cause inconvenience to consumers
in their daily commute. Interactions with stakeholders revealed that at times, behaviour
of drivers of B/Y taxis with consumers/ passengers is not congenial. This may further
create inconvenience and discomfort to consumers.
Impact on drivers
Substantial increase in taxis with engine capacity more than 1400 CC is expected to
adversely impact the income of existing drivers of such taxis. Most of these drivers are
also expected to be owners of such taxis. As indicated earlier, each such new taxi with
engine capacity more than 1400 CC is expected to cost these drivers at least INR 8,00,000.
As most of these taxis are procured on loan, decrease in income of drivers would make it
difficult for such drivers to afford personal expenditure and monthly loan repayment at
the same time. On the other hand, decrease in taxis with engine capacity less than 1400
CC and increase in demand of such taxis is expected to positively impact income of drivers
of such taxis.
To the extent consumer of taxis linked with app based aggregators shift towards B/Y
taxis, owing to their inability to afford the increased/ high fares in such market, the
drivers of B/Y taxis are expected to experience positive impact on their income.
As indicated earlier, additional 14,557 taxis with engine capacity more than 1400 CC are
required to be linked with app based aggregators. In case such taxis are not available, the
application for license by aggregators might be rejected by the licensing authority. Even if
aggregators are able to link with desired number of taxis with engine capacity more than
1400 CC, it might not result in substantial increase in revenue generated, owing to limited
demand from consumers and high fares.
At the same time, existing 1,681 taxis with engine capacity less than 1400 CC are required
to be delinked with app based aggregators. A significant proportion of revenue for
aggregators is generated by the taxis with engine capacity less than 1400 CC.
Consequently, the aforementioned requirement is expected to adversely impact the
revenue of taxi aggregators.
For every taxi with engine capacity less than 1400 CC which is expected to exit the app
based aggregator platform, the government is expected to forego a permit fee of INR
25,000. However, such loss is expected to be recouped by permit fee of INR 2,61,000 paid
by every taxi with engine capacity more than 1400 CC, which links with app based
aggregators. In addition, the government is expected to collect substantial tax on
procurement of any new car to be linked with app based aggregators.
However, to the extent, consumers are likely to shift to other modes of transport, such as
public transport, the government will be required to make substantial investments to
manage such increase in pressure on existing infrastructure.
The situation with respect to congestion is expected to exacerbate, however, the strain on
infrastructure will not be as much as it is in scenario 1. This is because additional taxis
with engine capacity more than 1400 CC expected to enter the market are less than the

55
number under previous scenario. Also, some taxis with engine capacity less than 1400 CC
are expected to exit app based aggregator platform.
Scenario 3: Taxis linked with app based aggregators increase at average growth
experienced since 2014
Impact on consumers
Total taxis linked with app based aggregator are expected to increase from 42,776 to
63,450 taxis. Consequently, additional 3,778 taxis with engine capacity less than 1400 CC
and 16,896 taxis with engine capacity more than 1400 CC, are expected to be linked with
app based aggregators. While the overall growth of market is expected to be in line with
consumer expectations, such growth is likely to be disproportionate. Consumers
preferring taxis with engine capacity less than 1400 CC may experience less than expected
growth and the growth of taxis with engine capacity more than 1400 CC may exceed
consumer expectations.
Consequently, consumers preferring taxis with engine capacity less than 1400 CC may
experience increase in fares and estimated wait time, while consumers preferring high-
end taxis may experience the opposite. As indicated earlier, the fare difference between
the two categories may resist consumers of low-end taxis from shifting to taxis with
engine capacity more than 1400 CC. Such consumers might shift to alternate modes of
transport, including public transport and B/Y taxis. However, consumers are expected to
shift to B/Y taxis only if average fares of taxis with engine capacity less than 1400 CC rise
above average fares of B/Y taxis.
Impact on drivers
Given the supply of taxis with engine capacity more than 1400 CC is expected to increase
without consequent increase in demand of such taxis, it may result in substantial
reduction of fare for such taxis. This may result in substantial reduction of income of
drivers of such taxis. This may further delay the breakeven point for drivers. As such taxis
are bought on loan, delayed breakeven would mean longer payback period.
In case of drivers with engine capacity less than 1400 CC, given that demand is expected
to outweigh supply, the consequent increase in dynamic fares is likely to increase income
of existing drivers. To the extent consumers shift to B/Y taxis, the income of drivers of
such taxis is expected to increase.
As indicated above, additional 3,778 taxis with engine capacity less than 1400 CC and
16,896 taxis with engine capacity more than 1400 CC, are required to be linked with app
based aggregators. Given the demand for taxis with engine capacity less than 1400 CC
exceed its supply, the aggregators should not find it difficult to locate such taxis. However,
taking into account the competition between different aggregator platforms, the
aggregators would need to offer such taxi owners attractive terms to link their taxis with
them.
Given the limited demand for taxis with engine capacity more than 1400 CC, aggregators
might find it difficult to identify required number of high-end taxis. Inability to link the
requisite number of taxis may result in reject of application of aggregators by the
licensing authority.

56
Substantial increase in total number of app linked taxis is expected to increase the
revenue of government collected by way of permit fees and taxes on sale of new vehicles.
Given that number of taxis with engine capacity more than 1400 CC is likely to witness
exponential increase, the increase in revenue is expected to be substantial. The
government will also need to invest resources to manage burden on other modes of
transport, including public transport.
Substantial increase in total number of app linked taxis is expected to significantly
increase the proportion of cars per lakh population and per km road length. As compared
to previous scenarios, the increase in number of taxis with engine capacity more than
1400 CC is highest in this scenario i.e. 1669 when compared with scenario 1 and 2339
when compared with scenario 2.
Change in number of taxis with engine
capacity more than 1400 CC, when
compared with 2017
Scenario
1
Scenario
2
Scenario
3
Scenario
4
+15227 +14557 +16896 No
change
At present in Greater Mumbai area, taxis constitute approximately 4.4 percent of total
cars in the area.87 However, in this scenario, the percentage of taxi would increase to 6.5
percent of total cars in the area. Therefore, it is reasonable to assume that congestion
might increase significantly in the Greater Mumbai area.
Scenario 4: Total taxis with engine capacity more than 1400 CC remain constant
Impact on consumers
Total taxis with engine capacity less than 1400 CC are expected to be reduced by 88
percent. Consequently, the availability of such taxis for consumers is expected to reduce
significantly. This is expected to substantially increase the fare and expected time of
arrival for remaining taxis linked with app based aggregators. Owing to limited supply
and high demand, the consumers are highly likely face increased dynamic fare and
consequent increase in average fare of such taxis. Fare and expected time of arrival are
two most important factors which consumers consider while booking taxi linked with app
based aggregator.
Should the consumers choose to move to taxis with engine capacity more than 1400 CC,
they will need to pay high fare for using such high end taxis. Also, the consumers are likely
to shift to other modes of transport, such as, B/Y taxis, auto rickshaws, local trains,
metros, buses, private vehicles etc. Approximately 80 percent consumers interacted with
have previously opted for an alternate mode of transport over taxis linked app based
aggregator because of high estimated fare, on account of dynamic pricing. Approximately
51 percent consumers opted for public transport (buses/ train). This may result in
reduced comfort and increase in time taken to reach desired destination.
87 Category wise and Office wise Motor Vehicle Population as on March 2017, available at
https://transport.maharashtra.gov.in/Site/Upload/GR/Vehicle%20on%20road%20as%20on%2031%20mar
ch%2017%20prov.pdf

57
Further, more than 80 percent drivers of taxis linked with app based aggregators believed
that such requirement could reduce availability of small cars, resulting in inconvenience
to consumers, and also increase in fare.
Impact on drivers
If the scenario 4 is implemented, it is expected that around 35,646 taxis having engine
capacity less than 1400 CC linked with app based aggregators will need to be delinked.
This would adversely impact income generating opportunities of owners and drivers of
such taxis. Average daily income of approximately 79 percent drivers of taxis linked with
app based aggregators was in the range of INR 2000 – INR 2500, which might be at risk.
Such adverse impact on income could adversely impact ability of owners of such taxis to
repay the loan.
Given the significant decrease in availability of app based aggregators, the consumers are
expected to shift to other modes of transport, including B/Y taxis. Such increase in
demand might positively impact income of drivers of B/Y taxis.
Significant reduction in number of taxis in the market is expected to adversely impact the
revenue generating capacity of app based aggregators.
As significant number of taxis with engine capacity less than 1400 CC is expected to delink
app based aggregators. The government is expected to forego permit fee of INR 25,000
each such taxi which exits the market.
Given that consumers are expected to heavily rely on public transport, the government
will be expected to make substantial invests in upgrading infrastructure and ensuring
availability of public transport.
As total taxis linked with app based aggregators are expected to reduce from 42,776 to
7,129, the proportion of total taxis to per lakh population and per km road in Greater
Mumbai region is expected to substantially reduce. This may reduce congestion. However,
a substantial decrease in availability of taxis may nudge consumers to procure private
vehicles. To the extent the number of private vehicles increase, the situation with respect
to congestion is likely to exacerbate. Consequently, it would be difficult to forecast any
impact on congestion with certainty.
5. Net Impact
In case the fleet composition requirement comes into force, taxis linked with app based
aggregators may undergo change as indicated the three most likely scenarios as discussed
above. The fourth scenario wherein the total number of taxis is projected to drastically
reduce from 42776 to 7129 is assumed to be unlikely.

58
1 Engine capacity of taxis <1400 >1400
2 Total number of taxis (2017) 40637 2139
3 Total number of taxis based on normal growth projections (est)
(2018) i.e. total demand for taxis based on normal growth projects 52869 2783
4 Maximum revenue generation per driver per day basis stakeholder
interaction (INR) 2500 2500
5 Estimated maximum revenue generation per day based on normal
growth projections(2018) (3 X 4) (INR) 13272500 6957500
The net impact on taxi drivers in each of these scenarios is estimated below.
Estimated figures for
2018 for taxis with
different engine
capacities
Scenario 1 Scenario 2 Scenario 3
<1400 >1400 <1400 >1400 <1400 >1400
6 Number of taxis 40637 17416 38956 16696 44415 19035
7
Revenue generation per
driver per day
(5 ÷ 6) (INR)
3252.52 399.48 3392.86 416.72 2975.87 365.51
8
Change in revenue
generation per driver per
day (7 – 4) (INR)
752.52 -2100.52 892.86 -2083.28 475.87 -2134.49
9
Net impact on revenue
generation per driver
per day (INR)
Negative.
-1348.00
Negative.
-1190.42
Negative.
-1658.62
In each of the three likely scenarios, the change in number of taxis with engine capacity
less than 1400 CC is unlikely to match the consumer demand, as projected in the normal
growth scenario mentioned above. Consequently, the consumers of taxis with engine
capacity less than 1400 CC (and currently paying INR 180 as fare per trip88) may choose
shift of A/C buses, SUV taxis or B/Y taxis. The impact on consumers as a result of such
shift is set out below.
AC Buses SUV Taxis B/Y Taxis
Additional cost in
choosing one of the
alternate options
Inconvenience cost -
INR 14589 per trip*
i.e. INR 290 per
day*** (probability)
= 290/3 = 96.67
Additional fare -
INR 20090 per
trip* i.e. INR 400
per day***
(probability) =
400/ 3 = 133.33
Additional fare - INR
1391 per trip* i.e. INR
26 per day***
(probability) = 26/ 3 =
8.67
INR 238.6792
*Trip means a 10 km trip in MMR region
*** It has been assumed that one consumer takes at least one round trip in a day, i.e. two
trips to and fro – from source to destination (and back).
However, the probability of choosing an alternate to taxis with engine capacity less than
1400 CC differs in each of the likely scenarios, as discussed below.
88 1 trip = 30 minutes ride of 10 kms
89 INR 180 – INR 35 (fare per trip of AC bus)
90 INR 380 (fare per trip of SUV taxi) – INR 180
91 INR 193 (fare per trip of B/Y taxi) – INR 180
92 INR 96.67+133.33+8.67 = INR 238.67

59
Scenario Total
Demand
for taxis
with
engine
capacity
less than
1400 CC
(A)*
Total
availability of
taxis with
engine
capacity less
than 1400 CC
(B)
Probability of
consumers
finding a taxi
with engine
capacity less
than 1400 CC
(C = B ÷ A)
Probability of
consumers not
finding a taxi
with engine
capacity less
than 1400 CC
(D = 1 – C)
Additional cost/
net impact on a
consumer for
choosing one of
three alternate
options per day
(INR)
(E = 238.67 X D)
Scenario
1
52869 40637 0.77 0.23 Negative.
- 54.89 of which -
22.23 is
inconvenience cost
i.e. monetary cost
= - 32.66
Scenario
2
52869 38956 0.74 0.26 Negative.
- 62.05 of which -
25.13 is
inconvenience cost
i.e. monetary cost
= - 36.92
Scenario
3
52869 44415 0.84 0.16 Negative.
- 38.19 of which –
15.47 is
inconvenience cost
i.e. monetary cost
= - 22.72
*Based on normal growth projections. See 3 in table above.
In case the consumers who earlier chose taxis having engine capacity below 1400 CC shift
to AC buses or B/Y taxis, the aggregators are likely to forego the revenue hitherto
generated from taxis having engine capacity below 1400 CC. Should the consumers shift
to taxis with engine capacity higher than 1400 CC, their revenue is likely to increase.
Assuming that the aggregators earn 20 percent93 of fare per ride, the change in revenue
of aggregator in each scenario is estimated in table below.
Scenario Probability
of
consumers
not finding
a taxi with
engine
capacity
less than
1400 CC
(A)*
Revenue
foregone by
aggregators if
AC bus is
chosen by
consumers
(Cost) (B)
(INR)
Revenue
foregone by
aggregators if
B/Y taxi is
chosen by
consumers
(Cost) (C)
(INR)
Additional
revenue
generation by
aggregator if
SUV taxi is
chosen
(Benefit) (D)
(INR)
Net
impact
[E = D
–
(C+B)]
(INR)
Net impact
per
consumer
per day in
light of
probability
of choosing
an
alternate
mode
[F = E * A]
(INR)
Scenario
1
0.23 72** ÷3=24 72**÷3=24 80***÷3=26.67 - 21.33 Negative.
- 4.90
Scenario
2
0.26 72**÷3=24 72**÷3=24 80***÷3=26.67 - 21.33 Negative.
- 5.55
Scenario
3
0.16 72**÷3=24 72**÷3=24 80***÷3=26.67 - 21.33 Negative.
- 3.41
* See D in the table above
93 Based on stakeholder interactions

60
** INR 180 (fare per ride of taxi <1400 CC) X 20% (aggregator commission) X 2 trips per day = INR 72
*** INR 200 (additional fare per ride taxi >1400 CC)) X 20% (aggregator commission) X 2 trips per
day = INR 80
to AC buses, the government is likely to earn additional revenue owing to the increased
fare collection. In addition, the number of taxis having engine capacity more than 1400 CC
is likely to increase, resulting in increased permit fee collection by the government.
The impact on government in each of three likely scenarios is set out below.
Scenario Probability
of
consumers
not finding a
taxi with
engine
capacity less
than 1400
CC (A)*
Additional
revenue
collection by
government if
AC bus is
chosen by a
consumer in a
day (B) (INR)
Additional
revenue
generation per
day by
government in
light of
probability of
consumers not
finding a taxi
with engine
capacity less
than 1400 CC (C
= B X A) (INR)
Additional
revenue
generation per
day by
government on
account of
permit fee
collection from
new taxis (INR)
(D)
Net impact
on
government
[E = D + C]
(INR)
Scenario 1 0.23 23.33* 5.36 0.82** Positive.
6.18
6.88
4.55
* INR 35 (fare per trip) X 2 trips in a day = INR 70 per day ÷ 3 (probability of choosing AC
bus among other two options) = INR 23.33
** INR 1500 (permit fee) / 5 years / 365 days in a year = INR 0.82
to B/Y taxis, drivers of such taxis are likely to earn additional revenue, as set out in the
table below.
Scenario Probability of
consumers not
finding a taxi with
engine capacity less
than 1400 CC (A)*
Additional revenue
collection if b/Y taxi
is chosen by a
consumer in a day
(B) (INR)
Additional revenue generation
per day by B/Y taxi driver in light
of probability of consumers not
finding a taxi with engine capacity
less than 1400 CC (C = B X A) (INR)
Scenario 1 0.23 128.67* 29.59
Scenario 2 0.26 128.67* 33.45
Scenario 3 0.16 128.67* 20.59
* INR 193 (fare per trip) X 2 trips in a day = INR 386 per day ÷ 3 (probability of choosing
B/Y taxis among other two options) = INR 128.67

61
Based on above, the estimated impact on all stakeholders is set out below.
Stakeholders Scenario 1 Scenario 2 Scenario 3 Net impact*
App based taxi
Drivers
Costs -1348.00 -1190.42 -1658.62 Negative.
-1399.01* per
day
Benefits
B/Y Taxi
drivers
Costs
Benefits 29.59 33.45 20.59 Positive.
27.87* per day
Consumers
(monetary)
Costs - 32.66 - 36.92 - 22.72 Negative.
- 30.77* per dayBenefits
Consumers
(inconvenience)
Costs -22.23 -25.13 -15.47 Negative.
Government Costs Positive.
5.87* per dayBenefits 6.18 6.88 4.55
Aggregators Costs - 4.90 - 5.55 - 3.41 Negative.
stakeholders
Negative.
- 1401.61
per day
Negative.
- 1251.14
per day
Negative.
- 1695.67
per day
Negative
- 1421.60 per day
* Net impact = (Scenario 1 + 2 + 3)/ 3, given that probability of occurring of any of the
scenarios is equal
It can be deduced that the net impact of fleet composition requirement is likely to be
negative i.e. costs estimated to be imposed by the requirement are likely to outweigh the
potential benefits. It might be recalled that one of the key intended objectives of the
requirement was to ensure optimal competition between and taxis linked with app based
aggregators and existing high end taxi services and ensuring that the latter remain viable.
With this objective, the Rules create reservation for high end taxis in the total fleet linked
with app based aggregators. However, the supply of high end taxis as a result of high end
taxis as a result of the requirement is expected to exceed demand, which may adversely
impact fares and potential revenue of operators of high end taxi operators.
6. Recommendations
As indicated earlier, many states in the country have formulated regulatory framework to
regulate app based aggregators. These include rules issued by the Haryana government
for its districts in the NCR,94 Karnataka,95 Rajasthan96 and West Bengal.97 Some states like
Madhya Pradesh have issued draft regulations and are in the process of finalising the
2016, available at
http://www.transport.rajasthan.gov.in/content/dam/transport/transport-

62
regulations. Interestingly, no state other than Maharashtra has introduced a restriction on
fleet composition of app based aggregators.
The report of Committee constituted by Ministry of Road Transport and Highways
(MoRTH) to propose taxi policy guideline to promote urban mobility recommends that
the states should not impose unreasonable restrictions that will make the taxi operations
economically unviable causing inconvenience to the citizens and increase in use of
personalised vehicles. It provides that there should be no restrictions on the choice of the
operator or aggregators with regard to composition of the fleet.98 Accordingly, the Khatua
Committee report recommended that the regulatory requirement in relation to fleet
composition should be deleted, as it is against public interest.99
The fleet composition requirement essentially makes a quota/ reservation for high end
taxis with engine capacity more than 1400 CC. Similar ‘quota’ regulations in other
economic sectors have reportedly had adverse consequences. For instance, in the
financial sector, for many years, banks were required to mandatorily open branches in
rural areas, should they wished to expand their branch network. The government
objective was to promote financial inclusion. While having limited benefits, such
mandates resulted in cross-subsidisation of banking services, increase in operating costs
and high cost to consumers for accessing financial services.100 Similarly, banks are
mandatorily lend a proportion of their total lending portfolio to ‘priority sectors’ under
the financial inclusion mandate. Such lending quotas have met with limited success.101
The route dispersal guidelines in the aviation sector also require airlines to deploy fixed
capacity on routes that are unprofitable.102 It has been pointed out that such guidelines
impede competition and have undesirable consequences.103 Similar practices have
reportedly been adopted in the road transport sector.104
The potential adverse impact of such ‘quota’ regulations are being realised and regulators
seem to increasingly taking corrective actions in form of evaluating the need for such
‘quotas’, linking the same to market, and introducing ‘exclusivity conditions105’ and
tradable certificates to make such conditions commercially viable. For instance, the
98 The report is available at
https://smartnet.niua.org/sites/default/files/resources/Taxi%20Policy%20Guidelines.pdf, accessed on 15th
December 2017
99 The Report of the Committee for Determination of the Fare Structure of Taxis and Auto Rikshaws in
Maharashtra State, September 2017, available at
https://transport.maharashtra.gov.in/Site/Upload/GR/Part%201.pdf
100 Panagariya, Bank Branch Expansion and Poverty Reduction: A comment, Columbia University, August 2006,
http://www.columbia.edu/~ap2231/technical%20papers/Bank%20Branch%20Expansion%20and%20Pove
rty.pdf
101Kochar, The Distributive Consequences of Social Banking: A micro empirical analysis of the Indian Experience,
The University of Chicago Press Journal, January 2011. Also, Committee on Comprehensive Financial Services
for Small Businesses and Low Income Households,
January 2014. Also, Nathan Associates Inc, Re-prioritising priority sector lending in India, December 2013, at
https://www.nathaninc.com/sites/default/files/Priority_Sector_Lending_India.pdf.
102 Majumder, Airlines spar over remote flying norms, Business Standard, December 2017, at
http://www.business-standard.com/article/companies/airlines-spar-over-remote-flying-norms-
117122600717_1.html
103 Nathan Economic Consulting, Research Study of the Civil Aviation Sector in India, CUTS Institute for
Regulation and Competition, January 2012, at http://www.circ.in/pdf/Civil_Aviation_Sector.pdf. Also,
https://www.bangaloreaviation.com/2014/10/route-dispersal-guidelines-anguish-airline-network-
planners.html
104 Mehta, Research Study of the Road Transport Sector in India, at
http://www.circ.in/pdf/Road_Transport_Sector.pdf
105 Clause 2.8 in the Regional Connectivity Scheme – UDAN, October 2016, at
http://www.civilaviation.gov.in/sites/default/files/Final%20Regional%20Connectivity%20Scheme%20%28
RCS%29.pdf

63
Reserve Bank of India has introduced a scheme for Priority Sector Lending (PSL)
Certificates, to enable banks to achieve the priority sector lending target and sub-targets
by purchase of these instruments in the event of shortfall and at the same time incentivize
the surplus banks; thereby enhancing lending to the categories under priority sector.106
The objective of fleet composition requirement is to protect interest of incumbent market
players and is not related to serving a hitherto under-served or excluded segment of the
market. A significant body of literature suggests that creating artificial barriers to protect
interests of incumbent operators is not advisable and may adversely impact consumer
welfare.107 Consequently, it is difficult to rationalise the need for prescribing fleet
composition through regulation, and the same should not be part of the Rules. Fleet
composition should be left to the market forces subject to demand of intermittent public
transport.
However, should the government feel that it is absolutely essential to retain the fleet
composition requirement in the Rules, the same should be rationalised. This can be
achieved through:
1. Linking the requirement with market forces and periodic review – At present, the share
for taxis with engine capacity more than 1400 CC is around 5 percent of the total demand.
Interactions with stakeholders suggest that the supply of taxis with engine capacity more
than 1400 CC is responsive to consumer demand.
At present, restrictions on fleet composition are based on equity grounds but there is no
conclusive evidence which can suggest that drivers of incumbent taxi services have
benefited in restricted markets108. On the contrary, high fare and controlled availability
adversely affect low income consumer group of taxi services. Therefore, it is
recommended that there should not be any cap on fleet composition. However, the
market condition should be periodically reviewed to identify disruptions in the market,
examine the ongoing changes in the market structure and assess if the supply is drifting
away from optimal situation. Literature109 suggests that in a free market where number of
taxis is unregulated, the social optimum110 can occur at a point at which industry profits
are negative.111 However, this is an unlikely condition, thus, periodic review of market is
necessary.
106 RBI Notification on Priority Sector Lending Certificates, April 2016, available at
https://rbi.org.in/scripts/NotificationUser.aspx?Id=10339&Mode=0
107 Armstrong, Regulation and Inefficient entry, February 2000, World Bank, at
http://siteresources.worldbank.org/INTWDRS/Resources/477365-1257315064764/3197_armstrong.pdf.
Also, Amato and Laudati (ed), The anti-competitive impact of regulation, The Robert Schuman Centre for
Advanced Studies at the European University Institute, 2001
108 OECD Report on Taxi Services: Competition and Regulation, available at
http://www.oecd.org/regreform/sectors/41472612.pdf, accessed on 30 March 2018
109 Yang, H., Ye, M., Tang, WH. & Wong, SC. (2003) Modelling Urban Taxi Services: A Literature Survey and an
Analytical Example. In Lam, HK, and Bell, MGH. (eds). Advanced Modeling for Transit Operations and Service
Planning. Pergamon Press
110 Social Optimum is defined as the point at which total (producer plus consumer) surplus is maximised
111 Revenue generated is equal to the cost incurred taxis engaged in business, but leaves a loss equal to dead
taxi miles i.e. mileage utilised by the taxi driver to drive to a booking without passengers in the taxi.

64
2. In addition, creating a tradeable market for Fleet Composition (FC) Certificates112 –
Akin to PSL certificates as discussed above, a tradeable market for fleet composition
certificates could be created to incentivise market players for achieving the desired fleet
composition. Aggregators who link more than the desired number of taxis should be in a
position to sell the FC certificates to aggregators who are unable to do so. The price of FC
certificates should be determined by market forces.
112 Fleet Composition Certificates are tradable, non-tangible taxi commodities (in form of certificate) that
represent proof that one taxi of engine capacity more than 1400 CC owned by eligible taxi service operator/
individual and is running into the taxi service market.

65
Chapter 4: Permit Fee
The Rules provide that vehicles attached to any aggregator will be required to obtain a
permit called the App Based City Taxi Permit (ABCTP). The ABCTP is granted on payment
of fee as mentioned below:
Table 4.1 ABCTP fee for taxis to be linked with app based aggregators
Type of Vehicle Permit fees (INR)
Motor Cab having engine capacity less than 1400 CC 25,000
Motor Cab having engine capacity 1400 CC or more. 2,61,000
The taxis and the type of permits of taxis currently operational in the MMR region is set
out in the table below
Table 4.2 Taxis and types of permits
Type of Taxi Permit fees (INR)
B/Y taxis under the Act 25,000113
Taxis with engine capacity of 1400 CC or more under Previous
Taxi Schemes of 2010
2,61,000114
Taxis with All India Tourist Permit (AITP) 1,500115
In addition to the permit fees, taxis are required to pay taxes, as set out below
Table 4.3 Taxes to be paid by taxis
Type of Taxi Frequency Permit fees (INR)
B/Y taxis under the Act One time INR 7,150116
Taxis with AITP (4 seater i.e. engine capacity
of less than 1400 CC)
Annual
INR 8000117
Taxis with AITP (6 seater i.e. engine capacity
of more than 1400 CC)
Annual
INR 12,000118
113 See 6 at https://transport.maharashtra.gov.in/1178/Permit-Fees, accessed on 16th December 2017
114 Preamble of Maharashtra City Taxi Rules, 2017
115 See 2(a) at https://transport.maharashtra.gov.in/1178/Permit-Fees, accessed on 16th December 2017
116 Page 92 of the Khatua Committee Report
117 INR 2000 per seat * 4 seats = INR 8,000. See, Page 92 of the Khatua Committee Report
118 INR 2000 per seat * 6 seats = INR 12,000. See, Page 92 of the Khatua Committee Report

66
Significant proportions of taxis linked with app based aggregators have AITP and compete
with other taxis in city transport market. Therefore, it appears that the intended objective
of the permit fee requirement is to create a level playing field between incumbents and
the new entrants i.e. taxis linked with app based aggregators, to the extent permit fee
requirement is concerned.
Given that permit fee for B/Y taxis and taxis in similar segment under the Rules (with
engine capacity between 980 CC and 1400 CC) is INR 25,000, the Rules provide that B/Y
taxis are freely allowed to get attached to any licensee under the Rules. Further, the
existing permit of B/Y taxi is deemed to be a permit granted under the Rules.
Similarly, the Rule provides that operators of taxis under Previous Taxi Schemes shall be
deemed to be aggregators under the Rules. Any permit granted/ used for vehicle
operating under such Previous Taxi Schemes, subject to payment of fee as prescribed
under the Rules, shall be deemed to be a permit granted under the Rules. The permit fee
paid in respect of permit under the Previous Taxi Schemes shall be set off from the permit
fee prescribed in this Rule but payable as per the Rule.
3. Baseline
While the B/Y taxis have been operating in Mumbai since a long time, the issuance of new
B/Y taxi permits was stopped in 1997 until recently.119 As result, the population of city
increased without any proportional increase in B/Y taxis.
The high end taxis with engine capacity more than 1400 CC were launched around 2005.
Under the Phone Fleet Taxi Scheme, 2010, limited number of permits were auctioned and
sold by the Government of Maharashtra at then discovered price of INR 2,61,000 per
permit.120 Of 4000 permits auctioned, the company which won the auction was able to
acquire only 2800 such permits.121
But if the Rules gets implemented, drivers with AITP permit will have to surrender their
existing AITP and would be required to obtain ABCTP by depositing prescribed permit
fee.
It appears that drivers of taxis linked with app based aggregators are not willing to
surrender AITP.
119 Kaali-peelis: Few want to drive yellow-top taxis, http://www.dnaindia.com/india/report-khaali-peeli-few-
want-to-drive-yellow-top-taxis-2533575, accessed on 17 December 2017
120 Preamble of Maharashtra City Taxi Rules, 2017
121 See Para 5.11.2, page no 103 of Khatua Committee Report

67
Figure 4.1 Perception of drivers towards AITP
Interaction with stakeholders revealed that taxis plying with AITP for intra city commute
are not illegal. Though originally meant for inter-state travel/ inter-city travel, it appears
that AITP rules do not prohibit drivers to ride within the city. In addition, the taxi policy
guidelines issued by MORTH committee revealed that AITP rules do not restrict the use of
taxi with AITP inside the city boundary.
In case the permit fee requirement comes into force, drivers will need to pay permit fee
prescribed under the Rules. This is likely to impact different stakeholder groups, as set
out below.
Impact on drivers
It is reasonable to assume that cars for operating as city taxis are procured on loan,
wherein the loan amount includes cost of permit fee. The table below estimates the
difference in daily cost to owners of taxis operating with AITP and ABCTP.
30% permits
auctioned for high
end taxi service
remained unacquired
Almost all drivers
associated with
aggregators possess
AITP and a
substantial
proportion are not
willing to surrender
the permits
Consumers care
about safety and
comfort and not
about type of permit
driver posseses

68
Per day cost incurred by taxi owners
S.
No Engine capacity of taxi/
Cost heads
< 1400 CC > 1400 CC
AITP
(INR)
ABCTP
(INR)
AITP
(INR)
ABCTP
(INR)
1 Cost 550000 550000 900000 900000
2 Permit Fees 1500 25000 1500 261000
3
Interest (10%) and
processing cost (2%) on
loan for 5 years on 1 + 2
162595 169523 265783 342289
4
Cost of repair and
maintenance for 5
years122
338880 338880 338880 338880
5
Cost of insurance and
taxes for 5 years123
162165 162165 162165 162165
6 Additional tax 40000124 7150125 60000126 7150127
7
Cost for five years (life of
car)128
1255140 1252718 1728328 2011484
8 Per day cost 687.75 686.42 947.03 1102.18
9 Difference 1.33 (155.15)
As can be deduced from the table above, the per day cost to owners of taxis with engine
capacity below 1400 CC, operating under ABCTP, is likely to be INR 1.33 lesser than
owners of similar taxis operating under AITP. However, for owners of taxis with engine
capacity more than 1400 CC, the per day cost of taxis operating under ABCTP is likely to
be more than INR 155.15, when compared with per day cost of similar taxis operating
under AITP.
Such increase in expenditure may delay the break-even for owners of app linked taxis.
This was validated during interaction with stakeholders. More than 50 percent drivers of
taxis linked with app based aggregators indicated that artificial restrictions under the
Rules might delay achieving break even in the business, and could also discourage new
entrants in the business.
Also, after depositing hefty permit fee and obtaining ABCTP, drivers would be restricted
to do business under city boundary limits. Consequently, such drivers may lose out
122 Annual cost of repair and maintenance is INR 67776*5 years. For details, see Part II of the Khatua
Committee Report
123 Annual cost of INR of insurance and taxes is 32433*5 years. For details, see Part II of the Khatua Committee
Report
125 One-time tax on B/Y taxis. It is assumed that taxis operating under the Rules with ABCTP will also need to
pay such tax
127 One-time tax on B/Y taxis. It is assumed that taxis operating under the Rules with ABCTP will also need to
pay such tax
128 The life of taxis has been assumed as 5 years for calculation purposes. Also, AITP is available for 5 years
and typical loan tenure is for 5 years.

69
income generating opportunities from other sources. This seems to be against the
business principle as additional investments are leading to reduction in revenues.
Other sources of income for drivers with AITP are: (i) car rental for outstation trips; (ii)
car rental for within the city commute; (iii) cars attached with government/private offices
etc. ABCTP would not permit taxi for aforementioned services. Therefore, it is reasonable
to assume that surrendering AITP would be a huge opportunity cost for such drivers.
Approximately 88 percent of the drivers of taxis linked with app based aggregators have
shown reservation in surrendering AITP for ABCTP. The main reasons include high
permit fee and loss of income generating opportunities from other sources.
Figure 4.2 Reasons for not surrendering AITP
Further, interactions with stakeholders revealed that the probable impacts of high permit
fee could be: (a) Reduction in profit margins of app based aggregators; (b) Increase in fare
of taxi services; (c) Reduction in the number of taxis linked with app based aggregators;
(d) Discouragement to new drivers to associate with app based aggregators.
Figure 4.3 Probable impact of high permit fee
Owners of taxis currently operating under AITP would have already paid the applicable
permit fee of INR 1500. In case such owners decide to surrender their permit and obtain
ABCTP, they will have to pay an additional permit fee of INR 25,000 or INR 2,61,000, as
may be applicable.

70
Approximately 52 percent drivers linked with app based aggregators do not own the
taxis. In the event owners of such taxis decide to delink their taxis owing to high permit
fee, such drivers may lose their job or steady source of income. Of such drivers,
approximately 32 percent are first time drivers i.e. they were not associated with taxi
business earlier. Therefore, it is reasonable to assume that such drivers chose to associate
with app based aggregators for better employment and steady income opportunity.
Consequently, such taxi drivers are expected to forego income which could have been
generated owing to linkage with app based aggregators. The average daily income
foregone by each such driver could be in the range of INR 2000 - INR 2500.
As indicated earlier, permits granted under Previous Taxi Schemes, subject to payment of
fee as prescribed under the Rules, shall be deemed to be permits granted under the Rules.
The permit fee paid in respect of permits under the Previous Taxi Schemes shall be set off
from the permit fee prescribed in this Rule but payable as per the Rule. Consequently,
taxis operating under Previous Taxi Schemes are likely to find it easier to obtain a permit
under the Rules. In addition, they are expected to find limited competition as stringent
entry barriers in form of high permit fees is likely dissuade interested persons from
obtaining ABCTP. Consequently, such taxis are likely to benefit from increase in demand
and limited supply of taxis linked with app based aggregators.
Similarly, drivers of existing B/Y taxis are likely to benefit from increase in demand of
such taxis owing to limited supply of taxis linked with app based aggregators.
Impact on consumers
As indicated earlier, a significant proportion of drivers with AITP are unlikely to
surrender their permits to obtain ABCTP. This may result in artificial scarcity of taxis in
the city. Consequently, the consumers may have to shift to other modes of transport, such
as, B/Y taxis, auto rickshaws, local trains, metros, mono rail, buses, private vehicles etc.
Thus, it may result in inconvenient and uncomfortable travel as compared to taxi ride. In
addition, time taken to reach desired destination might increase.
However, some drivers may choose to opt for ABCTP by payment of high permit fee. It is
reasonable to assume that such increase in operating cost will eventually be passed on to
consumers in form of increased fares, reduced quality or limited access. As indicated
earlier, for owners of taxis with engine capacity more than 1400 CC, the per day cost of
taxis operating under ABCTP is likely to be more than INR 155.15, when compared with
per day cost of similar taxis operating under AITP. It is reasonable to assume that such
increase in cost will be passed on to the consumers.
Impact on Aggregators
As indicated earlier, existing operators under Previous Taxi Schemes are deemed to be
aggregators under the Rules. However, they may experience reduction in fleet size as
substantial proportion of existing vehicles linked with operators have AITPs, most of
which are unlikely to be surrendered. Also, increase in operational cost of taxis linked
with aggregators owing to high permit fees is likely to adversely impact revenue
prospects of aggregators as well.
Should aggregators decide to increase fares of taxis, price sensitive consumers might shift
to other modes of transport adversely impacting aggregators.

71
Impact on Government
Reduction in number of taxis linked with app based aggregators is expected to put
pressure on other modes of transport, including public transport.
In order to manage rising demand, the Government of Maharashtra has been promoting
intermittent public transport.129 It has recently removed cap on number of B/Y taxi
permits. However, such relaxation failed to attract many and the permits largely remain
unsold.130
Consequently, the government is expected to make substantial investments to upgrade
existing public transport system. One of the ways could be infusion of good quality city
buses in the system along with enhancement of existing network of such buses.
However, the permit fee and taxes applicable on taxis under the Act and Rules are
different, as highlighted in the table below
Table 4.4 Change in Permit fee and Taxes collection by the government (INR)
Type of Taxi
Aggregate per
taxi permit fee
and taxes at
present
Aggregate per taxi
permit fee and
taxes if Rules can
implemented*
Change in fee
and tax
collected from
one taxi
Taxi with AITP (4 seater i.e.
engine capacity of less than
1400 CC)
41,500131 32,150132 (9350)
Taxi with AITP (6 seater i.e.
engine capacity of more than
1400 CC)
61,500133 2,68,150134 2,06,650
Additional fee and tax collected by government per taxi 1,97,300
* Assuming taxis with AITP surrender their permit and obtain permit under the Rules, and
the one-time tax of INR 7150 is also applicable on such taxis.
Despite losing revenue of INR 9,350 per taxi with engine capacity less than 1400 CC with
ABCTP in place of AITP, the government is likely to earn additional revenue of INR
2,06,650 per taxi with engine capacity more than 1400 CC with ABCTP in place of AITP.
Consequently, the net permit fee and tax collection by the government is likely to witness
an increase by INR 1, 97,300 per taxi.
Impact on Congestion
Reduction in the app based taxis would increase the load on other modes of transport
such as bus, local train, metros, K/P taxis etc. To the extent taxis currently operating as
129 Maharashtra State Urban Transport Policy, 2017
https://www.maharashtra.gov.in/Site/Upload/Acts%20Rules/Marathi/Notification%20for%20Transport%2
0Policy.pdf, accessed on 17 December 2017
130 Few takers for kaali-peeli driving permits
http://indianexpress.com/article/cities/mumbai/few-takers-for-kaali-peeli-driving-permits-4723625/,
accessed on 17 December 2017
131 1500 (permit fee) + (8000 * 5 years = 40,000) = 41500
132 25000 + 7150
133 1500 (permit fee) + (12000 * 5 years = 60,000) = 61500
134 261000 + 7150

72
city taxis will cease operation, due to unavailability of permits, the congestion is expected
to decrease. However, as mentioned earlier taxis linked with app based aggregators
constitute 4.4 percent of total cars in the city. Should the decrease in number of taxis in
the city is replaced by private cars; there might not be any significant impact on
congestion.
5. Net Impact
In case the permit fee requirement comes into force, drivers will need to pay permit fee
prescribed under the Rules. The consequent net and aggregate impact on different
stakeholders is set out below.
Stakeholders
Taxis having
engine capacity
less than 1400 CC
Taxis having
engine capacity
more than 1400
CC
Net impact per
stakeholder
(per day)
Taxi Drivers
Costs -
Increase in fixed cost
- INR 155.15 per day *
5% (probability) =
7.75 (for SUV taxis)
Negative
INR
- 6.49
Benefits
Reduction in fixed
cost - INR 1.33 per
day * 95%
(probability) = 1.26
(for hatchback taxis)
-
Consumers
Costs -
Significant increase in
fare
Negative
Benefits
Marginal decrease in
fare
-
Government
Costs
Reduction in fee
collection - INR 5.12
per taxi per day *
95% (probability) =
4.86
-
Positive
INR 0.80
Benefits -
Increase in fee
collection - INR
113.23 per taxi per
day * 5%
(probability) = 5.66
stakeholders (per day)
Negative
INR – 3.6
Negative
INR – 2.09
Negative
INR
- 5.69
It can be deduced that the net impact of permit fee requirement is likely to be negative i.e.
costs estimated to be imposed by the requirement are likely to outweigh the potential
benefits.
It might be recalled that one of the key intended objectives of the requirement was to
promote level playing field between incumbent B/Y taxis and taxis having obtained
permits under Previous Taxi Schemes with other taxis which have obtained AITPs. While
the costs of operations for all taxi drivers is expected to increase, this is likely to be
achieved at reduced income generating opportunities and higher costs to consumers.

73
6. Recommendations
Level playing field between market players can be created primarily through two
mechanisms. First, subjecting all market participants to stringent conditions and high
costs which incumbents have been subject or second, reducing the barriers and costs for
all participants, including incumbents, and promoting competition. Contrary to the latter
case, higher operating costs may adversely impact interest of stakeholders and consumers
in the former.
Reforms in several economic sectors have witnessed push backs from incumbents. Going
ahead with such reforms, however, is likely to benefit all stakeholders in long term. For
instance, in the aviation sector, the government recently decided to scrap a requirement
that mandated airlines to have five years of domestic operations to be eligible to fly
overseas.135 This was met with stiff resistance from incumbents as they had invested
significant resources to meet the said requirement. However, the liberalisation is likely to
benefit the industry as a whole. Similarly, the government has been introducing several
reforms to reduce cost of incorporation for businesses, which were not available to
incumbents.
Consequently, limited rationale exists from denying prospective market players from
benefits of reforms only because prevailing market players have incurred higher costs. In
order to ensure incumbents also benefit from reforms, broad-based reforms which reduce
the cost for incumbents should also be carried out.
Stakeholder interactions revealed that objective of the government from the permit fee
requirement has not been to generate revenue. Further, none of the states has imposed
such exorbitant permit fee. Some states have allowed AITP vehicles to operate as city
taxis. The report of the taxi policy committee of MoRTH had also cautioned against high
entry barriers in the market. It does not restrict vehicles with AITPs to operate as city
taxis. The Khatua Committee in its report recommended that such a rule is illogical and
unfair. The committee suggested that the fee should be reduced to INR 10,000 for all taxis,
part of which should be transferred to a taxi and auto rickshaw welfare fund.136
In the light of above, following recommendations are being made:
1. Taxis with AITPs should be permitted to operate under the Rules without
surrendering their existing permit.
2. The permit fee under the Rules should be decreased for all type of taxis and should be
uniform for all i.e. B/Y Taxis and taxis linked with app based aggregators. Further, the
fee should be nominal and should be charged uniformly irrespective of engine
capacity of taxi. Fees paid under prevailing rules should be set off from the permit fee
applicable under the Rules.
135 Majumder, Cabinet clears civil aviation policy, replaces 5/20 condition with 0/20 rule, Business Standard,
15 June 2016, at http://www.business-standard.com/article/economy-policy/cabinet-clears-civil-aviation-
policy-replaces-5-20-rule-116061500325_1.html
136 See Page 103 - 104, Khatua committee report. The report is available at
https://transport.maharashtra.gov.in/Site/Common/ViewPdfList.aspx?Doctype=421c4209-3a6e-4eba-9248-
47bfb7533389, accessed on 15th December 2017

74
Chapter 5: Requirement for PSV Badge
The Rule states that the driver shall have a valid commercial driving license to drive a taxi
and a valid Public Service Vehicle (PSV) Badge issued by the licensing authority. Further,
drivers are required to have adequate knowledge of the roads and routes of the area of
operation.137
In order to obtain PSV Badge, an individual is required to submit following documents to
the concerned authority: i) Domicile certificate ‘Form S.E.G.’ from Tehsildar; ii) Character
certificate from Superintendent of Police/ Police commissioner; iii) Medical certificate; iv)
address proof; and iv) driving license. It appears that the S.E.G certificate confirms that
the applicant is residing in the state of Maharashtra for at least 15 years.138 In addition, an
individual is required to satisfy the authorities about: its topographical knowledge of the
area of operation; and working knowledge of Marathi and any one of the languages
commonly spoken in such area.
The Rules indicate that objective of the aforementioned requirement is to ensure that the
passengers are not inconvenienced. Stakeholders were also of the view that the domicile
requirement intends to promote passenger convenience, comfort, and security. It was
believed that criminal records of the drivers migrating from other states would be
extremely difficult to verify. Therefore, the domicile condition could help authorities in
conducting thorough background check. The domicile related condition is likely to be met
by locals and individuals residing in the state for a significant period. Consequently, one of
the objectives of the requirement is to promote local employment.
137 Rule 7 of the Maharashtra City Taxi Rules 2017
138 See Para 5.9.2 at page 101 of the Khatua Committee Report.
See, http://mumbaisuburban.gov.in/pdf/forms/form%20no5.pdf, accessed on 16th December 2017
History of PSV Badge
The requirement of a PSV Badge was first inserted in the Motor Vehicle Act (Act),
1939 when drivers of Public Service Vehicles were required to wear a uniform and
badge for identification. The same provision has been retained under the current Act,
wherein power has been given to State Governments to issue badges to drivers of
transport vehicles under Section 28 of the Act. Basis the power granted by the Act,
many States have provided for the issue of Public Service Vehicle Badges in their
respective State Motor Vehicle Rules.
While neither the Act nor any of its Rules defines a public service vehicle (“PSV”)
Badge, it is considered to be a physical mark that is to be pinned on the left pin pocket
of driver/conductor of any public service vehicle plying in India. The PSV Badge can
be triangular, circular or rectangular, each shape usually denoting a particular type of
public service vehicle. The words “DRIVER” or “CONDUCTOR” along with his name
and badge number are to be printed on the badge. At times, the badge is supposed to
be written in English as well as the respective local language.

75
Further, certain consumer groups (such as elderly and from remote areas) are likely to be
more comfortable in communicating with drivers in local/ vernacular language.
Therefore, working knowledge of Marathi could help in better communication. Some
stakeholders also emphasised that while GPS is typically used in commuting, working
knowledge of roads and important landmarks could be helpful.
3. Baseline
The stringent eligibility criteria for obtaining a PSV Badge in Maharashtra appear to have
resulted in gradual reduction in number of commercial vehicles operating on roads. For
instance, in 1997, there were approximately 63000 B/Y taxis in Mumbai city. However,
the number of such taxis in city decreased to approximately 42,000 in 2013 and further
shrunk to approximately 37,000 in 2017.139
In 2014, the government had announced a lottery for renewing B/Y taxi permits.
Interaction with stakeholders revealed that many such permits were not renewed or
remained unsold because of unavailability of drivers fulfilling stringent eligibility criteria.
Similarly, in 2016 the government removed the cap on issuance of permits for B/Y
taxis.140 However, such liberalisation did not elicit adequate response as enough local
candidates fulfilling domicile condition were not available. The report of Khatua
Committee also noted that a significant number of drivers of B/Y taxis in the city are
migrants from Uttar Pradesh, Bihar and other states.141 Such drivers run B/Y taxis in the
city without PSV Badge.
Similarly, stakeholders estimated that approximately 50 percent taxis linked with the
operators licensed under Previous Fleet Taxi Schemes have remained unutilised as
adequate numbers of drivers fulfilling PSV Badge criteria were not available.
Interaction with stakeholders also revealed that most drivers of taxis linked with app
based aggregators do not meet the domicile condition, which was perceived to be
restrictive. This was validated by interactions with drivers of taxis linked with app based
aggregators in the survey, wherein approximately 32 percent drivers of taxis linked with
app based aggregators were not eligible to apply for the PSV Badge.
Figure 5.1: Current scenario and status of drivers against PSV badge
139 Few takers for Kaali-peelis driving permits http://indianexpress.com/article/cities/mumbai/few-takers-
for-kaali-peeli-driving-permits-4723625/, accessed on 17 December 2017
140 Id
141 Khatua Committee

76
Of 68 percent drivers eligible, approximately 16 percent have already obtained a PSV
Badge. Thus, around 52 percent drivers will need to apply for PSV Badge, should the Rule
become operational.
However, it must be noted that taxis under the Rules fall within the definition of motor
cab as defined under Motor Vehicle Act, 1988. Rule 24(1) of the Maharashtra Motor
Vehicle Rules, 1989, exempt drivers of motor cabs to obtain the PSV Badge. The Bombay
High Court has also observed that the need for drivers of motor cabs to satisfy the
requirement of Rule 24(1) of the Maharashtra Motor Vehicle Rules, 1989 is illegal as Rule
24 is not applicable to motor cabs.142 Thus, it appears to be inconsistency between
requirements under the Rules and the exemption provided under the Maharashtra Motor
Vehicle Rules, 1989.
With respect to other conditions, a significant proportion of stakeholders thought that
drivers should have adequate knowledge of topography and Marathi language. According
to approximately 71 percent consumers, it was important for the taxi drivers to have good
knowledge of city roads/ routes. Similarly, approximately 76 percent of drivers linked
with app based aggregators confirmed being familiar with road routes in Mumbai. In
addition, approximately 86 percent of drivers linked with app based aggregators were
able to speak and/ or understand Marathi language.
In addition, the Supreme Court in its judgement143 dated 3rd July 2017 in Mukund
Dewangan vs. Oriental Insurance Company Limited, state that licence issued to drive light
motor vehicle, it would also mean specific authorisation to drive a transport vehicle or
Omnibus, the gross vehicle weight or motor car, road roller or tractor, the unladen weight
of which, as the case may be, does not exceed 7500 kg. Thus, it is reasonable to assume
that that there is no requirement to obtain separate commercial license to drive transport
vehicle coming under Light motor vehicle144 category.
142 Shivpujan Kumar v/s State of Maharashtra (Writ petition 12843 of 2016), among other writ petitions
clubbed together
143
Supreme Court Judgement, Civil Appeal No. 5826 of 2011, Mukund Dewangan vs. Oriental
Insurance Company Limited & Ors can be accessed at
https://drive.google.com/file/d/0B1HsQbGlNpEfQlM5VXhGTnh4cVE/view
144
Light motor vehicle means the unladen weight of vehicle does not exceed 7500Kgs.
linked with app based
aggregators are not
eligible to apply for
PSV Badge
Many taxis remain
unoperational owing
to unavailability of
drivers fulfilling
domicile condition
Most drivers are
reasonably familiar
with local language
and topography

77
Impact on consumers
As indicated earlier, many taxis will become out of order owing to unavailability of drivers
fulfilling domicile condition. Several drivers which are currently plying taxis, including
taxis linked with app based aggregators, are not eligible to apply for PSV Badge. The Rule
would prohibit existing drivers of taxis linked with app based aggregators to continue
their linkage with aggregators. It would further restrict new drivers, who do not have PSV
Badge, to associate with app based aggregators.
In such situation, the number of taxis operational in the city would decrease significantly.
As the gap between demand and supply would increase due to artificial scarcity of
drivers, the fares of taxis are likely to increase significantly.
As indicated earlier, increase in fare is expected to force price sensitive consumers to shift
to public transport and B/Y taxis, which has inadequate infrastructure to cater the needs
of the consumers. Consequently, it would increase the commuting time of consumers.
Thus, it would cause inconvenience and discomfort to consumers.
Impact on drivers
Approximately 32 percent drivers of taxis linked with app based aggregators do not fulfil
the conditions to possess the PSV Badge. Substantial proportions of such drivers possess
reasonable knowledge of topography of Mumbai city and Marathi language. However,
they fail to meet the necessary condition of 15 years of residence in Maharashtra to
acquire state domicile certificate. Such a rule would compel such drivers to delink taxis
with app based aggregators, despite having awareness about routes and working
knowledge of Marathi language.
This is expected to significantly impact income of such drivers. As indicated earlier,
average daily income of drivers of taxis linked with app based aggregators was in the
range of INR 2000 – INR 2500, which might be at risk, owing to their inability to continue
association with app based aggregators. Interactions with stakeholders further revealed
that demand for inter-city and inter-state taxi is being met currently and such taxis are
readily available. Consequently, drivers who disassociate their taxis from app based
aggregators might not gain as per expectations if they ply taxis on inter-city and inter-
state routes. Thus, it is reasonable to assume that there would be a significant reduction
in the income of drivers. Further, many such drivers might be owners of taxis and would
have obtain taxis on loans to be repaid in instalments on interest. An adverse impact on
income is likely to delay the loan repayment and break-up for such drivers.
As most of drivers of taxis are migrants, their cost of living is expected to be much higher
than compared with local drivers, consequently, the PSV badge condition is expected to
adversely impact the former category of drivers.
To the extent drivers who are eligible to apply for PSV badge do so, they are expected to
incur substantial costs in doing so. The average time needed for a driver to obtain the PSV
Badge is in the range of 30 – 60 days, and the fee for the same is INR 766.145
145 https://transport.maharashtra.gov.in/1176/License-Fees, accessed on 17 December 2017

78
Figure 5.2 : Possible Impact of Proposed Rule on drivers
The existing drivers who possess PSV Badge are expected to experience increase in
demand and consequent increase in income.
Impact on Aggregators
If a significant proportion of drivers choose to discontinue their association with app
based aggregators owing to their inability to comply with the Rules, the aggregators might
be adversely impacted. The business model of aggregators is based on economies of scale
and the aggregators might revisit their business model.
Impact on Government
As indicated earlier, the Rule is unlikely to promote local employment as limited
individuals exist with requisite eligibility criteria. It might end up endorsing illegal driving
with increased the risk of accidents and entry of criminal elements into taxi business.146
This may adversely impact safety and security of consumers.
In addition, absence of adequate taxis in the city is likely to force consumers of taxis
linked with aggregators to shift to other modes of public and intermittent public
transport. To facilitate smooth travel for consumers, government would be required to
upgrade the public transport. Further, funders might be discouraged to invest in other
start-ups owing to such stringent and inconsistent policies.
Impact on Congestion
The Rule will result in substantial number of drivers becoming ineligible to drive taxis
linked with app based aggregators. Such taxis are expected to go off roads in Mumbai
region. This might result in reduction in congestion. However, there is a possibility that
such cars end remaining unutilised and end up taking parking space which might
adversely impact congestion.
It is likely that this will put significant pressure on public transport. However, should
consumers shift to private vehicles, the congestion situation in Mumbai region may
worsen.
5. Net Impact
In case the PSV badge requirement comes into force, it is assumed that drivers eligible for
obtaining PSV badge will invest necessary resources to obtain the badge. Drivers which
are not eligible will lose income generating opportunity. The table below highlights the
consequent impact on different stakeholders.
146 Para 5.9.6 page number 101 of Khatua Committee

79
Stakeholders
Drivers eligible to
obtain PSV Badge
Driver ‘not’ eligible for
PSV Badge
Net
Impact
(per day)
Taxi Drivers
Costs
Cost to one driver
per day - INR
0.10147/2 (for
calculating per unit
cost) =0.05
Of Taxis with engine capacity
less than 980CC:
Savings foregone per day
= INR 1000 per day X 0.95
(probability) = 950
Negative
INR
-821.38
Benefits -
Of B/Y taxis: Revenue of INR
193 per new trip i.e. INR 386
per day/ 3 (probability) =
128.67
Consumers
Costs -
Inconvenience cost of
travelling in AC bus INR –
240/ 3 (probability) = 80 +
Additional cost of travelling in
B/Y taxi – INR 76/ 3
(probability) = INR 25.33 per
day (probability) = INR 105.33
Negative
INR
-105.33148
Benefits - -
Government
Costs - -
Positive
INR 23.43
Benefits
Revenue generation
per driver per day =
INR 0.10
Of Bus: Revenue of INR 35 per
new trip i.e. INR 70 per day / 3
(probability) = INR 23.33
Aggregators
Costs -
Loss of revenue
INR 62149 X 0.67 (probability
of not choosing the mode) =
41.54
Negative
INR
- 41.54
Benefits - -
stakeholders
Positive
INR 0.05
Positive
INR 944.87
Negative
INR
- 944.82
It can be deduced that the net impact of PSV Badge requirement is likely to be negative i.e.
benefits. It might be recalled that one of the key intended objectives of the requirement
was to encourage local employment and ensure safety and security of consumers.
However, it appears that local youth is not inclined to work as taxi drivers as a result most
such positions are taken up by migrants, which might be adversely impacted by the Rule.
Consequently, the rule is likely to have an overall negative impact on employment in a
situation when the country is grappling with serious job creation challenges.150
Engagement as drivers with app based aggregators is an important employment
generation avenue.151 The government has launched several schemes to promote job
creation and entrepreneurship. This includes ensuring access to finance at cheaper rates.
147 INR 766 ÷ 20 years (life of taxi driver) ÷ 365 days = INR 0.10 per day
148 INR 158 / 2 (probability of choosing one option) * 2 (round trip) = INR 158
149 INR 31 revenue per trip * 2 trips per day = INR 62
150 Goyal et al, Elusive jobs: Modi govt slowly coming to terms with what awaits it in the final year, Economic
Times, 19 February 2018, notes, “cab-hailing apps like Ola and Uber employing 5,50,000 and 3,50,000 drivers
respectively in India as of July 2016, according to Statista.”
151 Sharma et al, Ola, Uber drivers and CAs to help Modi government solve its job math for india, Economic
Times, 24 February 2018. Also, Indian workers shifting to gig economy, Indian express, 05 February 2018

80
It appears that several individuals have availed this facility to purchase cars for linkage
with app based aggregators.152 Artificial restrictions like those imposed by PSV Badge
condition might unintentionally make taking up such micro-entrepreneurship initiatives
challenging.
6. Recommendations
A review of conditions imposed by regulatory framework of different states to verify
background of applicants reveals that most states do not require a PSV Badge. Typically,
documents required include: Self-attested copy of EPIC card, PAN card, residential
address proof, contact details of two family members.
Type of
regulation
Districts of
Haryana in
NCR153
Karnatak
a154
Rajasthan
155
West
Bengal156
Madhya
Pradesh
MoRTH
advisory
157
Delhi158
Public
Service
Vehicle
Badge
Required Required Police
verification,
self-
attested
copy of
EPIC card,
PAN card,
residential
address
proof,
contact
details of
two family
members
Self-
attested
copy of
EPIC card,
PAN card,
residential
address
proof,
contact
details of
two family
members
Driver
shall
have
valid
licence of
driving
the
vehicle.
Self-
attested
copy of
EPIC card,
PAN card,
residential
address
proof,
contact
details of
two family
members
Required
152 Shetty, Uber drivers will get SBI loans at below 12%, Times of India, 16 March 2016, at
https://timesofindia.indiatimes.com/business/india-business/Uber-drivers-will-get-SBI-loans-at-below-
12/articleshow/51426756.cms. Also, Rajappa, Gig economy: An empowering trend here to stay or a stumbling
block that compromises on labour welfare, Yourstory, 09 February 2018.
2016, available at http://www.transport.rajasthan.gov.in/content/dam/transport/transport-
Technologies Aggregators, 2015 available at https://wbxpress.com/wp-content/uploads/2016/03/4450-
WT.pdf, accessed on 15th December 2017
157 The Advisory for licensing, compliance and liability of on-demand information technology based
transportation aggregator issued by MoRTH is available at http://morth.nic.in/showfile.asp?lid=1822,
158 City Taxi Scheme – 2015 by Transport Department, available at
JPERES&lmod=-370276847 accessed on 15th December 2017

81
The Karnataka On–Demand Transportation Technology Aggregators Rules, 2016
(Karnataka Rules 2016) states that a driver shall be a resident of Karnataka for a
minimum period of two years. Further, the taxi policy guideline by MORTH committee
suggests that there should not be any unreasonable restrictions on drivers and licensee
that may make taxi operations unviable.
Parameters Maharashtra Delhi MP Rajasthan Haryana Karnataka West
Bengal
MORTH
Advisory
Minimum
residence in
state
15 years No No No No 2 years No No
Character
Certificate
Yes Yes Yes Yes Yes Yes Yes Yes
Medical
Certificate
Yes Yes Yes Yes Yes No Yes Yes
Address
Proof
Commercial
Driving
License
Knowledge
of
Topography
Yes No No No No No No No
Knowledge
of Local
Language
Marathi and
any one of the
language
commonly
spoken in the
area
No No No No Kannada
and any
one other
language,
preferably
English
No No
Consequently, it appears that the conditions imposed by the Rules are most stringent. The
report of Khatua committee also pointed that the requirement is inappropriate, and is
making the Rules extremely restrictive in nature. It recommends a period of residence of
two years. Further, the condition to have topographical knowledge and good moral
character to obtain badge has been covered in Rule 7(2)159 and & 7(4)160.
It must be noted that new technologies are emerging which can help in allaying some of
the concerns which prompted the state government to mandate PSV and a domicile
requirement. For instance, with universal identification like Aadhaar number, it should
become easier to authenticate individuals and conduct background check. The number
can also be used in criminal investigations. Furthermore, the Union Government is
planning to implement Global Positioning System (GPS) tracking devices and panic
buttons on transport vehicles by April 2019161
159 Rule 7(2) states that the driver shall possess adequate knowledge of the roads and routes of the area of
operation so that the passengers are not inconvenienced.
160 Rule 7(4) states that driver should have good moral character without any criminal record.
161
Gazette notification by Ministry of Road, Transport and Highways dated 18 April 2018.

82
Consequently, the following is being recommended:
1. Mandatory residence like artificial restrictions on employment need to be avoided
and job creation and entrepreneurship should be promoted.
2. The requirement of PSV Badge can be replaced with conditions like Aadhaar number,
residential address proof, and contact details of two family members.
3. Monitoring and supervision of drivers should be improved. Efforts for speedy
grievance redress need to be made.
4. Further, consumers appreciate if drivers have reasonable awareness of topography
and local language. Most drivers already meet such condition. Consequently, the
condition for drivers to have reasonable awareness of topography and local language
may be retained. However, the process of certification should be proportional and
should not create artificial barriers. Any rejection on these grounds should be in
writing and with adequate reasons. Proportional certification requirements should be
ascertained through a robust stakeholder consultation process. In addition,
monitoring and supervision of drivers should be improved. Efforts for speedy
grievance redress need to be made.

83
Chapter 6: Need to Operate Taxis on Clean Fuel
Any vehicle operating under the Rules is required to be driven on clean fuel i.e. unleaded
petrol or CNG or LPG or Hybrid or Electrical (power rating of electric vehicle will be
specified by the State Transport Authority). Such vehicle should meet emission standards
as prescribed from time to time by the Transport Authority.
If the services of any working vehicle operating under some valid permit are intended to
be offered through any aggregator, then the said vehicle is required to convert to be
driven on clean fuel, within a period of one year from the date of commencement of these
rules. The aggregator is required to submit certificate/undertaking in that behalf, at the
time of registration.
It appears that this Rule intends to create a level playing field between incumbent B/Y
taxis and fleet taxis, and new entrants i.e. taxis linked with app based aggregators in the
city taxi market. All incumbent city taxis operate on clean fuel and go through regular
checks on emission norms.
Stakeholder interactions revealed that objective of the clean fuel requirement was to
control vehicular emission resulting in air pollution.
3. Baseline
Approximately 64 percent drivers of taxis linked with app based aggregators use diesel
cars, and thus are expected to be impacted by the clean fuel regulation. Out of such
drivers, approximately 99 percent felt that it is unfair to restrict diesel taxis to operate as
city taxi.
Figure 6.1: Driver views on restricting diesel taxis
Further, approximately 77 percent of such drivers expressed inability to convert their taxi
from diesel to clean fuel. As a result, such drivers believed that they will left with no
option and will need to delink their taxis from app based aggregators. Interestingly,
approximately 85 percent of such drivers agreed to the rule being implemented in a
phased manner, over a period of 3-5 years.

84
Figure 6.2: Drivers views on conversion to clean fuel
Alternatively, approximately 89 percent drivers using diesel taxis opined that taxis are
not a major source of pollution in the city, and restricting them will not have a significant
impact on the desired outcome of curbing air pollution.
The requirement to operate taxis on clean fuel is not exclusive to Maharashtra. A similar
requirement was imposed in the NCR region, wherein the matter reached Supreme Court.
In its order, the Supreme Court directed that all existing taxis operating with AITP in the
National Capital Region should convert to clean fuel taxis on expiry of their present
permit period by efflux of time, i.e. allowed to operate diesel taxis till the validity of their
current permits. The Khatua committee made recommendations on same lines.162
Impact on drivers
In order to comply with clean fuel requirements, the diesel taxis will need to change
entire engine assembly along with fuel kit. The cost of conversion from diesel to CNG per
vehicle is approximately between INR 60,000 to INR 1 lakh.163 Interaction with experts
revealed that conversion of engine capacity might adversely impact performance of the
vehicle, reduce engine life, increase wear and tear of the vehicle, and enhance
maintenance cost.
An alternative to changing engine assembly is procurement of new car which runs on
clean fuel. Interactions with stakeholders revealed that a significant proportion of drivers
of diesel taxis were prepared to buy to a new car which runs on clean fuel, and thus
willing to continue their linkage with app based aggregators. Each such new procurement
is expected to cost approximately 5 lakhs.
Interactions with drivers currently linked with app based aggregators revealed that a
substantial proportion of such drivers will not be in a position to make investments to
change the entire engine assembly or procure new clean fuel taxi. It is reasonable to
assume that these drivers relied on financial institutions to procure such taxis, and are in
the process of making repayments.
162 Paragraph 5.6.3 at page 99 of the Khatua Committee Report
163 http://www.mycarhelpline.com/index.php?option=com_easyblog&view=entry&id=557&Itemid=91, and
http://indianexpress.com/article/cities/delhi/diesel-to-cng-conversion-to-cost-dearly-taxi-drivers-look-for-
alternatives/, accessed on 17th December 2017
77% of drivers of diesel taxis
expressed inability to
convert/change their taxis
89% drivers of diesel taxis
opined that taxis are not the
major source of pollution
85% drivers of diesel taxis
agreed to such rule being
implemented during 3-5 years

85
As a result of clean fuel requirement, such drivers may be left with limited income
generating opportunities, and may find it difficult in making repayments. As a result of
delinking from app based aggregators, such drivers will need to forego their daily income
ranging from INR 2000 – INR 2500. Further, of such drivers, approximately 72 percent
did not hitherto generate income from inter-city taxi services. Such drivers might be even
adversely impacted by the clean fuel requirement under the Rules.
Furthermore, drivers of taxis with engine capacity less than 980 CC likely to lose the
business completely as consumers ordinarily hesitate to prefer such taxis for long route
travel. Thus, it is reasonable to assume that owners of such taxis likely to bear fixed cost
of taxi i.e. INR 581.32 per day.
The Rules provide a transition time of one year for drivers linked with app based
aggregators. Stakeholder interactions revealed that such time period might not be
sufficient to incentivise a significant majority of drivers to shift to clean fuel requirement.
Impact on consumers
Interactions with stakeholders revealed that approximately 82 percent users of taxis
linked to app based aggregators thought that it was unfair to ban use of diesel taxis for
city transport. Should such rule be implemented, the fares of city taxi services are likely to
increase and the availability of such taxis will decrease.
In other words, if approximately 77 percent drivers of diesel run taxis are forced to
discontinue their linkage with app based aggregators, it may result in a substantial
reduction in the number of taxis associated with app based aggregators.
Figure 6.3: User views on restricting diesel taxis
As a result, price sensitive consumers may move to other modes of transport, such as,
black and yellow taxis, auto rickshaws, local trains, metros, buses, private vehicles etc.
This may require additional resources, result in reduced comfort, or an increase in time
taken to reach desired destination. Interaction with stakeholders also suggests that close
to approximately 80 percent users have opted for an alternate mode of transport over app
based taxis because of high estimated fare, on account of surge/ dynamic pricing. Of such
number, approximately 63 percent consumers opted for public transport (buses/ train).
Catering to the rule of clean fuel requirement, some of the drivers of taxis linked to app
based aggregators will need to procure new CNG taxis, and apply for permit under the
82%
64% 55%
0
20
40
60
80
100
Users who think that is unfair to ban diesel taxis
Users who think there will be less taxis on the roads
Users who think fare will increase
Total Number of Users - 1000

86
Rules. As a result, the government is expected to generate revenue in form of registration
fees, tax on sale of taxis, permits issued to such taxis, among other sources.
However, alternatively, if the drivers delink from app based aggregators, this will impact
the availability of taxis in the cities. Such a reduction will negatively impact the already
overloaded public transport, and intermittent public transport. Government will have to
put additional efforts to improve the said transport services to improve commuting
options to the residents.
The business model of app based aggregators is based upon the taxis linked, and is
directly impacted by an increase or decrease of drivers associated with them. If the Rules
are implemented without providing appropriate transition time to drivers, there is a risk
of loss of revenue due to drivers being unable to switch to clean fuel in a short duration.
Taxis which are unable to comply with the clean fuel requirement will need to be delinked
from app based aggregators. As a result, it is reasonable to assume that the business of the
app based aggregators will be negatively impacted, and they may incur losses, and less
revenue from their models.
A decrease in the number of taxis linked with the app based aggregators might reduce the
congestion on the city roads. However, the pressure on existing public transport and
intermittent public transport systems is expected to increase, since users may opt for
alternate sources. To the extent existing taxis are in a position to comply with clean fuel
requirement.
Impact on environment
To the extent existing taxis linked with app based aggregators are able to comply with the
clean fuel requirement; the environment is expected to be positively impacted. In case
such taxis are unable to comply with the requirement, they are expected to go off road. In
such situation, consumers might transition to alternative modes of travel which are
already expected to be running on clean fuel. Consequently, environment is not likely to
be negatively impacted. However, if such consumers move to modes which are not plying
on clean fuel, the environment might be negatively impacted.
5. Net Impact
In case the clean fuel requirement comes into force, the owners of taxis running with
diesel fuel will need to convert diesel engine assembly into petrol engine/ CNG engine
assembly. The table below estimates net impact in such scenario:
Stakeholders
Taxis with changed engine
assembly
Net Impact
(per day)
Taxi Drivers
Costs
Cost of conversion - INR 32.88 per
day164
Negative
INR
- 32.88
Benefits -
Consumers
Costs Marginal increase in fare
Negative
Benefits -
164 INR 60,000 (total cost of conversion) / 5 years / 365 days = INR 32.88 per day.

87
Stakeholders
Taxis with changed engine
assembly
Net Impact
(per day)
Aggregators
Costs Marginal loss of revenue
Negative
Benefits -
stakeholders
Negative
INR
- 32.88
Negative
INR
- 32.88
However, it was revealed during stakeholder interactions that conversion of diesel engine
assembly into petrol engine/ CNG engine assembly may not be permitted. Consequently,
the taxi owners will need to procure new taxis for which costs have been estimated, in the
table below.
Stakeholders
New Taxis with Clean
Fuel*
Existing Taxi with Diesel
Fuel
Net
Impact
(per
day)
Taxi Drivers
Costs
Per day savings foregone
For existing taxis with engine
capacity less than 1400 CC:
Revenue (INR 2000 * 95% =
1900 / 3 = 633.33) – Cost
(1400 CC - INR 687.75 * 95%
= 653.36 / 2 = 326.68) =
306.65
For existing taxis with engine
capacity more than 1400 CC:
Revenue (INR 2000 * 5% =
100 / 3 = 33.33) – Cost (INR
947 * 5% = 47.35 / 2) = 23.67
Total savings foregone per
taxi = INR 330.32
Positive
INR
128.67
Benefits
Per day savings
For new taxis with
engine capacity less than
1400 CC: Revenue (INR
2000 * 95% = 1900 / 3 =
633.33) – Cost** (1400
CC - INR 687.75 X 95% =
653.36 / 2 = 326.68) =
306.65
For new taxis with
than 1400 CC: Revenue
(INR 2000 * 5% = 100 /
3 = 33.33) – Cost** (INR
947 X 5% = 47.35 / 2) =
23.67
Total savings per new
taxi = INR 330.32
Of B/Y taxis: Revenue of INR
193 per new trip i.e. INR 386
per day/ 3 (probability) =
INR 128.67

88
Consumers
Costs
Inconvenience cost of
travelling in AC bus – INR
240/ 3 = 80 +
Additional cost of travelling
in B/Y taxi – INR 76 / 3 = INR
25.33 per day (probability) =
INR 105.33
Negative
- 105.33
Benefits - -
Government
Costs - -
Positive
INR
46.62
Benefits
Per day permit fee and
tax collection from new
taxis less than 1400 CC -
INR 22.74 * 95% = INR
21.60
Per day permit fee and
tax collection for taxis
more than 1400 CC –
INR 33.70
permit fee and INR 2000
as tax per seat * 5% =
1.69
Fee and tax collection per
new taxi = INR 23.29
Of Bus: Revenue of INR 35
per new trip i.e. INR 70 per
day / 3 (probability) = INR
23.33
Aggregators
Costs Loss of revenue
Negative
Benefits Increase in revenue
stakeholders
Positive
INR
353.61
Negative
INR
- 283.65
Positive
INR
69.96
** Costs are inclusive of permit fee and taxes
6. Recommendations
The report of MoRTH Committee recommends that any new taxi should not be allowed to
procure a permit unless it complies with the fuel type prescribed by the state department.
However, it states that existing taxis which do not conform to the mandated fuel
requirement may be allowed to operate till their permit is valid.
The Khatua Committee in its report also recommends similar process to gradually phase
out diesel taxis. The report notes that most of the taxis associated with aggregators are
diesel taxis. Also, there is no technology available to convert diesel cars to clean fuel cars.
It is not feasible for drivers to sell their taxis at throw away prices due to regulatory
distress. Such taxis should be replaced after the existing permit expires by natural efflux
of time, which is also the judgement of Supreme Court in the National Capital Region
(NCR) for a similar issue.
Based on above, it is recommended that:
1. Instead of regulating type of the fuel used for taxis, government may decide to regulate
and ensure implementation of strict emission standards. Such regulations will also
promote innovation so that the emission from diesel taxis may be controlled to the extent
possible. Such innovation will also help in curbing air pollution due to emission caused by
other vehicles apart from the city taxis.

89
2. Government may also incentivise use of clean fuel taxis over diesel taxis, so that drivers
may find using clean fuel more lucrative. Our interactions with the stakeholders also
noted that there is a lack of CNG availability in the city. The CNG pumps are not sufficient
to cater to the demand of taxis, and if more taxis are added, it may put more burden on
the existing infrastructure, resulting in more time taken in refuelling. Government can
focus on improving the CNG infrastructure in the city while taking a phased approach, so
that drivers can convert/change their existing taxis to clean fuel over a period of time
without jeopardising their investments and livelihood.
3. The transition period to comply with clean fuel requirement must be reviewed and
decided based after consultation with stakeholders. The government should provide
adequate support to taxi drivers to manage the transition.

90
Chapter 7: Colour Standardisation
The Rules state that all the taxis operating under ABCTP shall be painted as specified
below:
Figure 7.1: Specified colour on the vehicle
Vehicle Side Colour
Top side of Vehicle White Colour
Front and rear bumper assembly of vehicle White Colour
Lower side of the vehicle Daffodil Yellow (RAL 1007)
Colour
However, black and yellow taxis, cool cabs and taxis under Previous Taxi Schemes may
continue with their present colours.
It appears that this Rule intends to make it easy for commuters to identify taxis at
locations with large number of vehicles moving at any point of time. The Rule also aims to
create level playing field among the incumbents such as B/Y taxis, fleet taxis and new
entrants since standardised colour is defined for all incumbents.
3. Baseline
At present, there is no standard colour defined for taxis linked with app based
aggregators, whereas all incumbent taxis are required to have a standard colour (Black
and Yellow for B/Y taxis etc.) to operate in the city.
Interactions with stakeholders revealed that majority of users of taxis linked with app
based taxis do not face any difficulty in finding booked taxis, due to the details such as the
model, colour, registration number of the taxi etc. displayed on the mobile application of
the aggregators after the ride is booked. The application also tracks the taxi in real time so
that users can see location of booked taxi on the mobile application.
Approximately 87 percent users of taxis linked with app based aggregators found it easy
to locate their booked taxi in a crowded location, such as airport or railway station even
without a standard colour. Interestingly, approximately 48 percent of users were of the
opinion that a standard colour may not make it convenient to locate the booked taxi.
Similarly, approximately 97 percent of drivers of taxis linked with app based taxis were of
the view that the users do not find it difficult to locate booked taxis after arriving at the
location.

91
Figure 7.2: Users opinion on ease of locating booked taxis
Furthermore, approximately 64 percent of drivers of taxis linked with app based
aggregators revealed that there would be no benefit associated with the proposed
standardised colour scheme for taxis linked to app based aggregators.
Figure 7.3: Stakeholders view on implementation of standardised colour
Impact on taxi drivers
In case the rule to standardise the colour of taxis is implemented, the drivers will incur
extra costs in getting the taxis repainted. Interactions with stakeholders revealed that
approximately 50 percent of drivers linked with app based taxis were afraid of reduced
profit margins on account of additional expenditure on repainting the taxi. According to
Khatua Committee, the repainting cost will be approximately INR 50,000 – 60,000, which
will lead to additional expenditure to the drivers. It suggests that repainted colour may
not last for as long without fading. Furthermore, approximately 50 percent drivers
48% of users opined that standard colour of taxis may not impact ease of
locating taxis
64% of drivers are of thought that there would be no benefit associated with
standardised colour.

92
reported a potential inability to earn additional revenue through advertisement, due to
limited space available after the repaint. Such limitations may impact the earnings of
drivers, with added costs of repainting the taxi to adhere to the Rules.
Alternatively, based upon the stakeholder interactions, drivers who do not opt for ABCTP
owing to standardised colour requirement may have to forego an income of INR 2000 –
2500 per day, due to delinking from app based aggregators. Consequently, they may face
difficulties in paying their debts and maintaining their taxis.
As indicated earlier, black and yellow taxis, cool cabs and taxis under Previous Taxi
Schemes may continue with their present colours. Consequently, they are unlikely to be
negatively impacted on account of Rules. However, as other drivers may face increase in
cost of operations and possibly reduced operations, the incumbent drivers may
experience increase in demand.
Impact on consumers
As indicated earlier, approximately 87 percent of users did not face any difficulty in
locating the booked taxis. It is reasonable to assume that mandating a standard colour
may not make any difference in ease of locating taxis. However, the costs incurred by
drivers for changing the colour of the taxis might be passed on to the consumers resulting
in increase in fares.
The requirement may dissuade potential drivers from linking their taxis to app based
aggregators. To the extent this happens, the supply of taxis might not increase in
consonance with demand, resulting in increase in fares, or longer estimated time of
arrival.
The app based aggregators may not be directly impacted by the implementation of
aforementioned rule. However, the additional cost of repainting the taxi might adversely
impact the revenue of drivers, and thereby adversely impacting the revenue projections
of aggregators.
Alternatively, as discussed above, the drivers may refuse to opt for ABCTP due to
additional expenditure required to be incurred. This may impact the business of the
aggregators, since the number of taxis linked with the app based aggregators may
decrease, which will adversely impact the revenue of the aggregators.
If the government decides to implement such rule to standardise the colour of the taxis
linked with app based aggregators, there may be no benefits associated with it. As
discussed above, approximately 87 percent consumers find it easy to identify the booked
taxis, which is the primary objective behind such Rule.
Furthermore, if many drivers decide to discontinue their linkage with app based
aggregators by not opting for ABCTP, it may result in a decrease in the fleet size of the app
based aggregators. Consequently, such decline may cause increased burden on
intermittent public transport, and public transport systems. Based upon the stakeholder
interactions, existing transportation system in the city is insufficient to cater to the needs
of commuters, and needs substantial overhaul to facilitate quick and comfortable
experience to such commuters.

93
There may not be any impact on the congestion in the city, due to implementation of such
rule to standardise the colour of taxis linked to app based aggregators. However, if the
drivers disassociate themselves from app based aggregators due to implementation of
such rule, the number of taxis on the city roads may decrease and may reduce congestion.
5. Net Impact
The following table compares the impact of the standardised colour requirement on
different stakeholder groups, and postulates the net impact:
Stakeholders Taxis with Daffodil Colour
Net Impact
(per day)
Taxi Drivers
Costs
Cost to colour one taxi - INR 50,000165
or INR - 27.40 per day
Negative
INR
- 27.40
Benefits -
Consumers
Costs Marginal increase in fare
Negative
Benefits -
Aggregators
Costs Marginal loss of revenue
Negative
Benefits -
stakeholders
Negative
INR
- 27.40
Negative
INR
- 27.40
It can be deduced that the net impact of colour requirement is likely to be negative i.e.
benefits. It might be recalled that one of the key intended objectives of the requirement
was to improve identification of taxis linked with app based aggregators which is unlikely
to be achieved.
6. Recommendations
None of the Indian states have any regulations regarding the colour of the taxis linked to
app based aggregators.
The MORTH committee report recommends that states should not impose any
unreasonable regulations, which may make the operations unviable. In addition to
Maharashtra, only Delhi has a standardised colour requirement. The Khatua committee
recommends that the drivers should be allowed to purchase a taxi of any colour. However,
putting a sticker of aggregator brand name and logo can be made mandatory to be put on
taxis.
Based on above, it is recommended that the standard colour rule is unlikely to benefit the
consumers, in terms of ease of identifying taxis. It may result in drivers incurring
additional costs. Such a rule can be done away with, and if there is a need to identify the
taxis from other vehicles, a sticker of the name of aggregator, or the logo of such
aggregator at all sides of the taxis should suffice for the purpose.
165 Part 2 Khatua Committee Report

94
Chapter 8: Conclusion and Way Forward
1. Aggregate impact
The previous sections of the Report discussed in detail likely impact of select provisions
of the Rules. The table below presents the aggregate impact and highlights that different
Rules impact diverse stakeholders in divergent manner. In aggregate, the Rules are likely
to negatively impact all stakeholders taken together.
Rules/
Stakeholders
Minimum
Engine
Capacity
Fleet
Composition
Permit
and Fee
Requirement
for PSV
badge
Need to
operate
taxis on
clean
fuel
Colour
standardisation
Consumers
(actual)
-39.89 -30.77 -25.33
Consumers
(inconvenience)
-76 -20.94 -80
B/Y taxi 122.23 27.87 128.67
Compact
Hatchback
-950 -950
Hatchback 114 707.08 1.26 -0.05 -31.24 -26.03
SUV -2106.09 -7.75 -1.64 -1.37
Bus 22.16 5.05 23.33
Permit & Fee 0.82 0.8 0.1
Aggregators -36.1 -4.62 -41.54
Net impact -843.6 -1421.6 -5.69 -944.82 -32.88 -27.4
2. Way Forward
There is a merit in beginning to think about costs and benefits of regulatory proposals
prior to their adoption and assessing whether the regulatory objectives are likely to be
met at minimum costs.
This holds true in case of Rules as well. It may be useful to consider alternatives to some
of the provisions of the Rules, estimate their impacts and examine if such alternatives are
likely to meet the regulatory objectives at lesser costs, when compared with costs likely to
be imposed by the Rules.
Summary of recommendations
The restriction on minimum engine capacity should be rationalised to allow taxis with
engine capacity of 600 CC and above to link with app based aggregators. Further, better
alternatives to ensure consumer safety and comfort, such as prescribing power to
weight ratio, should be explored
The minimum fleet capacity requirement should be removed. A periodic market
analysis should be conducted to assess if supply of taxis is corresponding to demand
and artificial barriers are present.
Taxis with AITPs should be permitted to operate under the Rules without surrendering
their existing permit. The permit fee should be decreased for all types of taxis and

95
Summary of recommendations
should be nominal and uniform. Fee paid under different rules should be set off from
the permit fee applicable under the Rules.
Mandatory conditions such as permanent residence of Maharashtra result in artificial
restrictions on employment. These conditions need to be avoided while job creation
and entrepreneurship should be promoted. Further, the requirement of PSV Badge can
be replaced with conditions like Aadhaar number, to ensure authenticity of drivers. This
relaxation should be provided to incumbent taxi service providers as well.
The transition period to comply with clean fuel requirement must be reviewed and
decided based on consultation with relevant stakeholders. Further, instead of regulating
type of the fuel, government may regulate emission standards.
The colour standardisation requirement can be done away with, and if there is a need to
differentiate taxis from other vehicles, a sticker of the name of aggregator, or the logo of
such aggregator at all sides of the taxis should suffice. This relaxation should be
provided to incumbent taxi service providers as well.
It must also be noted that several incumbent city taxi providers are already subject to
provisions similar to Rules (such as PSV badge, minimum engine capacity, and clean fuel)
and are incurring significant compliance cost. In fact, one of the rationales for
introduction of the Rules was to create level playing field between incumbent city taxi
providers and taxis linked with app based service providers. A level playing field may not
necessarily be achieved by increasing the costs of new market entrants to match the costs
of incumbents but can also be created by reducing the costs of incumbents to match the
costs of new entrants. In other words, there is a need to revisit the regulatory framework
for incumbent city taxi providers and ensure they are subject to reasonable and
proportionate regulatory requirements which are likely to achieve the regulatory
objectives at least costs to such incumbents.
However, reforming specific existing regulatory provisions may not necessarily ensure
that similar regulatory frameworks will not be issued in future wherein costs may
outweigh benefits. Thus, there is a need to reform the regulation making process and
institutionalise the process of considering impacts of regulatory proposals in advance.
RIA serves this purpose. To ensure the adoption of RIA in the regulatory process, political
will is necessary. Various expert committees and independent studies166 have already
recommended adoption of RIA in India. These include erstwhile Planning Commission’s
Working Group on Business Regulatory Framework (WGBRF) (2011)167, Financial Sector
Legislative Reforms Commission (FSLRC) (2013), Committee for Reforming the
Regulatory Environment for Doing Business in India (2013), Tax Administration and
Reforms Commission (2015), and the Department of Industrial Policy and Promotion’s
Expert Committee on Prior Permissions and Regulatory Mechanism (2016).
More recently, the Ministry of Commerce & Industry, Government of India has constituted
a Better Regulation Advisory Group with the objective of improving regulatory processes.
A sub-group consisting of CUTS International and Federation of Indian Micro and Small
and Medium Enterprises (FISME) was tasked to suggest a mechanism for adoption of RIA
in India, for ministries and regulators under the Central Government to improve
regulatory processes.168
166
CUTS projects on Regulatory Impact Assessments in India are available at http://cuts-ccier.org/ria/
167
to which CUTS acted as a Knowledge Partner
168 http://pib.nic.in/newsite/PrintRelease.aspx?relid=176264

96
However, RIA comes with its own limitations. It cannot guarantee implementation/
administration and compliance with regulations. The information collected through
stakeholder consultation is largely based on perceptions. Further, at present, limited
understanding exists among stakeholder community about the RIA tool, thus making data
collection challenging. The capacity within government departments to conduct RIAs/
cost-benefit analyses is also limited. To overcome such limitations, greater awareness
about RIA and its utility is required. Similarly, capacity building initiatives within
government departments on RIA are essential. The government should create a dedicated
pool of officers to conduct RIAs across sectors and build capacities within different
departments, over time. Building such capacity and conducting periodic RIAs would put
significant strain on exchequer. However, the consequent benefits of improved regulatory
governance and imposition of minimal costs on stakeholders to achieve regulatory
objectives are expected to outweigh the costs of institutionalisation and conducting RIA.

Regulatory Impact Assessment of Maharashtra City Taxi Rules 2017

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