Ola cabs
File photo of the Ola logo

The US-based Uber and Bengaluru-based Ola taxi operators who use apps to find and service their customers are set to face tough new legal guidelines to be unveiled soon by the Union government to regulate the burgeoning taxi app market.

Financial Times reports that it has seen a copy of the guidelines which has not yet been published and which suggest that " all ride-hailing services should be fitted with "emergency safety buttons" and in-app features allowing passengers to call the police in an emergency."

Last week, China also issued tough new regulations to control the taxi app market. In India, the controls are being formulated and put in place given a number of unsavoury incidents involving drivers using the taxi apps. Both Ola, which is based in Bengaluru, and Uber are drawing in hordes of drivers to their platforms and plan to expand operations.

Traditional taxi drivers are unhappy with the way Ola and Uber are cutting into their market using technology and competitive pricing strategies. There have been incidents of traditional taxi drivers using threats to keep drivers using taxi apps away from lucrative pick up points like airports (one such incident was reported from Mangaluru recently), bus or train stations.

Passenger safety concerns, that came to the fore after the rape of a woman reportedly by a Uber driver in New Delhi, have also added to the pressures faced by Uber and Ola. The new guidelines will force taxi app operators to have thorough criminal background checks and verifications of the drivers they employ on their platforms.

Financial Times notes that Uber is investing about $1bn in a rapid expansion in India — already its largest market outside the US, measured by the number of cities in which it operates — but has often found itself operating in grey areas under Indian law.

Taxi regulations in Indian states have not been upgraded to face the sudden onslaught of new situations that have emerged in the wake of the entry of the taxi app platforms. Most laws are outdated or a complicated mix of confused norms. The Delhi government, for instance, had a knee-jerk reaction of banning Uber in the wake of the reported rape of a woman passenger.  The guidelines will hopefully allow for a more rational approach instead of unleashing a maze of legal conundrums and battles, industry sources said.

Financial Times quoted Uber as welcoming the guidelines, calling them "a big leap towards recognising sector-specific regulations for technology-based ride-hailing services in India."