New Delhi | July 2, 2025 – Your next cab ride during rush hour may cost more than before — legally. In a significant revamp of India’s urban mobility rules, the Ministry of Road Transport and Highways has introduced Motor Vehicles Aggregator Guidelines (MVAG) 2025, enabling cab aggregators to charge up to twice the base fare during peak hours.
The move, announced on July 1, raises the upper limit for surge pricing from 1.5x to 2x, offering more flexibility to platforms like Uber, Ola, and others during high-demand periods such as office hours, festivals, and weather disruptions.
The new guidelines aim to balance market dynamics with regulation, providing platforms the tools to handle supply-demand imbalances while continuing to protect commuter rights.
Bike Taxis Get a Legal Green Light
Perhaps more transformative is the government’s decision to allow non-transport (private) motorcycles to operate as bike taxis, subject to approval by state governments. The guidelines, for the first time, formally recognize shared two-wheeler mobility as part of India’s transport ecosystem.
States can now decide whether to allow these services and can also levy daily, weekly, or fortnightly fees from operators under Clause 23 of the new framework. The move is expected to bring regulatory clarity to operators like Rapido, which have long functioned in legal limbo across several Indian cities.
Rapido, Uber Welcome the Move
For companies caught in regulatory gridlocks in states like Karnataka, where bike taxi bans sparked protests, the announcement brings a sigh of relief.
Calling it a “milestone in India’s journey toward a Viksit Bharat,” Rapido said the change would help boost last-mile connectivity, create jobs, and ensure affordable mobility in underserved areas.
Uber, which also offers bike taxi services, lauded the ministry’s consultative and progressive approach.
“Timely adoption by states will be key. We commend the ministry for ensuring innovation is supported by policy clarity,” said a company spokesperson.
What Changes for Riders and Drivers?
- Higher Peak Hour Fares: The new surge cap of 2x means riders could see fares spike during heavy traffic times. However, this also incentivizes more drivers to be on the road when demand is high.
- Legalized Bike Taxi Services: Riders will now have more options for quick and cost-effective two-wheeler rides, especially for short urban commutes. Drivers, especially gig workers, gain a legitimate income source without requiring a commercial vehicle license (subject to state policy).
- More Flexibility for States: States retain the autonomy to regulate aggregators, set additional safety standards, and determine fee structures for bike taxis.
Why MVAG 2025 Matters
The updated guidelines replace the 2020 version, reflecting the evolving dynamics of shared mobility in India. Over the past five years, demand for bike taxis, e-rickshaws, EV fleets, and customized pricing models has surged, driven by urban growth, fuel prices, and technology.
With India’s urban population projected to exceed 600 million by 2030, flexible, eco-friendly, and affordable transport systems are a necessity.
A senior ministry official said:
“MVAG 2025 is designed to be light-touch, focusing on safety, user security, and driver welfare, while allowing platforms the space to innovate and scale.”
While the guidelines are now in place, states have three months to adopt and implement them. This means bike taxis may remain in a grey zone until individual state transport departments release their own rules.
Still, industry experts say this is a landmark moment in India’s mobility journey, signalling a shift toward modern, flexible urban transport ecosystems.
The MVAG 2025 guidelines are more than a policy update — they are a roadmap for future-ready urban mobility in India. By legalizing bike taxis and allowing market-based surge pricing, the government is sending a clear signal: it’s time to innovate, regulate, and move — faster and smarter.
