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In a big blow to cab aggregator Ola, the Karnataka Transport Department on Friday suspended its licence for six months, ordering it to stop all its services in the State with immediate effect, for running ‘illegal’ bike-taxi services in Bengaluru.
The order, issued on March 18, says the licence issued to Ola Cabs Bengaluru up to June 19, 2021, has been suspended and that all the company’s services must be withdrawn within three days of receiving the order.
Post this ban, Ola could see a revenue loss of about ₹8 crore a day in Bengaluru alone, which is its second biggest market after Delhi.
“We noticed that Ola was clearly flouting the law by running illegal bike-taxi services since the last two months, and provided the Transport Department with evidence of the same, following which the Department seized over 200 vehicles of Ola and other illegal bike-taxi operators. Despite chargesheets being filed against Ola by the Department, Ola continued with its illegal bike-taxi operations. Therefore, the Transport Department has acted upon it,” Tanveer Pasha, President of the Ola Uber Drivers and Owners Association, told BusinessLine .
Ola, in a statement, called the notification unfortunate. “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 its 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,” it said.
An investor in Ola said the government cannot simply shut down a transport service without offering an alternative immediately. “It is a lifeline for commuters. Such an action was unnecessary. Instead, the government could have initiated a dialogue with the stakeholders,” he said.
Speaking to BusinessLine , Siddharth Pahwa, former CEO of Meru Cabs, said the step taken by the Karnataka government was inappropriate. “The size and scale of the market are quite big, both from the demand and the supply side. The government should allow market dynamics to play out both in terms of pricing and the type of cabs,” he said. He also said it will be difficult for the State to implement the ban.
Finding loopholes
“The cab-hailing market sees close to 2 million rides a day across the country. Players like Ola add a lot of value to the lives of both commuters and driver-partners. Ola will find a way of coming out of this situation, much like Amazon and Flipkart did when the new e-commerce regulations came into effect,” said Ujjwal Chaudhry, Associate Director, RedSeer Consulting.
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