Karnataka sets the ball rolling on aggregator app to stop 'loot' by private ride-hailing firms

Transport dept invites expressions of interest for JV partnership; entity will develop, operate & run app for seven years

Bengaluru: Karnataka has finally kick-started the process of launching its own mobile phone app that will offer cab and auto rides at “reasonable” fares. 

On February 14, the Transport Department invited Expressions of Interest (EoI) from Joint Venture (JV) partners to establish, develop, operate, maintain and monitor an aggregation system for taxis/autos in Karnataka. 

Karnataka is keen to launch such an app because it has been engaged in a running battle with private ride-hailing firms such as Ola and Uber. It has refused to renew their licences for auto and cab services, saying they don’t comply with the statutory regulations. The companies still operate because of a court stay. 

Cab and auto drivers also want the government to launch such an app, saying Ola and Uber charge them exorbitant commissions. 

Similar apps launched by the state governments of Kerala and Goa have met with limited success. 

Transport Minister Ramalinga Reddy stressed that the app was aimed at stopping the “loot” of Ola and Uber. 

“We want to support both drivers and passengers. The app will work on a no-profit, no-loss model. If it takes off, these firms will pack up and go home,” he told DH. 

Reddy was noncommittal on when the app would launch, saying the process would take time. 

“We need to see who applies and whether they can meet our criteria. It’s still early days,” he said. 

The EoI notice states: “The Transport Department believes that integrating (ride-sharing and cab aggregator services) into its existing e-governance framework would enhance the overall efficiency and convenience for all stakeholders.” 

It said the aggregator system should be designed to connect passengers with licensed and registered taxi drivers. It should have a full-fledged support setup to address the app registration and onboarding, redress grievances, provide real-time online assistance and monitor the app. 

The duration of the JV will be seven years, and the department will offer the partner a 49% stake in the proposed entity. 

The detailed terms and conditions and other definitive documents, including the JV agreement, the memorandum and articles of association and the long-term business plan for such a JV shall be mutually agreed upon, it added. 

Interested companies meeting the pre-qualification requirements should submit their technical proposals with business models, security measures and operational models. The Transport Department will reserve the enforcement rights, collection of fines, penalties, charges and other statutory functions. 

March 16 is the last to submit the bids. 

S Nataraj Sharma, president of the Federation of Karnataka State Private Transport Associations, said the Transport Department was hiring an “outside” agency because it didn’t have the technical know-how to launch and run such an app. 

“Yes, we have asked for it (the app) but the government must make sure that the agency that runs this app doesn’t charge a commission of more than 5%. It shouldn’t fleece drivers or passengers,” he said. 

Urban mobility expert Satya Arikutharam criticised the government’s decision to launch its app. “The government is essentially saying it cannot regulate the aggregators. This is shameful,” he said. “The solution should be proper pragmatic regulations, not entering the business. The government should govern, not do business.”