Home / BUSINESS / Karnataka transport department suspends Ola’s licence for six months – Livemint

Karnataka transport department suspends Ola’s licence for six months – Livemint

Bengaluru: The Karnataka transport department has issued a notice to ride hailing company Ola cabs (ANI Technologies Pvt Ltd) directing the latter to return its licence as well as cease all its operations with immediate effect for operating two-wheeler taxis in violation of existing provisions of the act.

The licence has been suspended for a period of six months.

“There is a violation of rules as bike taxis are not part of the licence issued to them (Ola),” said an official with the state transport department, requesting not to be named.

The notice to cease operations reviving the tussle between archaic government regulations and new age technology companies in Bengaluru, home to one of the biggest start-up ecosystems in the world. The official added that the state transport authority took cognizance of the matter after it received complaints and a subsequent report by the regional transport authorities.

“Under the licence, only app-based taxi services were permitted and there was no permission for bike taxis,” the transport department said in its notice to Ola on 18 March.

Ola and Uber, the two main ride hailing companies were given their respective licences under the newly formulated ‘Karnataka On-Demand Transportation Technology Aggregators Rules 2016’ that came after drawn out legal battles.

Also Read: How the Motor Vehicles Bill affects Ola, Uber

Both Ola and Uber had run into trouble with the transport department when it began offering two-wheeler taxi services in 2016. Though the state government had proposed to formulate rules facilitating bike taxis in Bengaluru, there was little progress despite the interest shown by the industry.

“We have been closely working with the authorities on this topic, responding to queries and making proactive representations to the ministry. Despite other companies continuing to operate illegally, Ola halted our bike taxi experiment weeks ago, instead seeking the state’s cooperation to develop a legal framework for a pilot that will continue to take advantage of emerging opportunities in the mobility economy,” Ola said in a statement on Friday.

The transport department said that the response to the notice by Ola was not in accordance with the rules.

“This notification is unfortunate, and we look forward to an opportunity to address these concerns directly with state officials to find a solution for our driver-partners and millions of Ola users in Karnataka,” the company added.

The crackdown on Ola is likely to impact Ola’s business in its home city and its largest market, Bengaluru, but also impact thousands of drivers on the platform, say industry analysts tracking the cab-hailing sector.

The overall cab-hailing market witnesses about 2 million daily rides of which 70-80% is from top seven cities including Bengaluru, as per industry estimates.

That said, several analysts Mint spoke with have said that the cab-hailing market has been witnessing a slowdown in growth — down to 20-30% year-on-year from a stupendous growth of 100% year-on-year a few years ago.

“This suspension impacts the drivers and Ola’s business in the short run, but I am quite sure that Ola would be able to resolve this with the authorities and may not see a six-month long suspension,” said an analyst tracking the space, requesting anonymity. “The cab-hailing market has been experiencing a slowdown in growth because of a lack of supply (of cabs) due to which customers have been moving away to bike rental services.”

Karnataka transport department suspends Ola’s licence for six months – Livemint

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