Bike Taxis: The problem that must be solved

Contributed by: Samvad Partners






The bike taxi industry in India is a problem ridden one. With issues ranging from lack of clarity in the laws governing bike taxis to refusal of permission to operate by transport departments, to time consuming procedures in obtaining a commercial license, organisations providing bike taxi services have not yet found a firm footing.


The earliest form of using a two-wheeler as a taxi in India has existed in Goa since 1981. In fact, the Goa Motorcycle Taxi Riders Association was founded even earlier, in 1980, to operate motorcycle taxis in the state. The concept itself has not found huge favour within India yet (as compared to the cab aggregation business which has exploded in India). However, one look at the roads in India, and it is easy to understand that two wheelers are a common feature on Indian roads, regardless of which part of the country one might be in. Given the practical usage of two wheelers for transportation purposes and the ease of accessibility, which still has not completely found its way to four wheelers, it is surprising that India does not have a full - blown bike taxi industry on par or even close to the cab aggregation industry in India.


Legality of bike taxis in India

The legal position in India about bike taxis is a slightly complex one. The Motor Vehicles Act, 1988 (“Act”) defines a vehicle used for commercial purposes as a “contract carriage.” Under section 2(7), a contract carriage is defined as:


“…a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum – (a) on a time basis, whether or not with reference to any route or distance; or (b) from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes – (i) a maxicab; and (ii) a motorcab notwithstanding that separate fares are charged for its passengers;”


The above definition applies to a vehicle used for commercial purposes in India. The definition of a contract carriage uses the term “Motor Cab” which is defined under section 2(25) of the Act as “…any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward”.


Further, the word ‘motor vehicle’, has also been defined under Section 2(28) of the Act and states that any vehicle with less than 4 wheels will not be considered a ‘motor vehicle’ under the Act.


Reading the above three definitions together, it can be construed that that a motorcycle being a two-wheeler falls outside the ambit of the definition of a “motor cab” and a “motor vehicle”.


Hence, it can be said that the usage of motorcycles for a commercial purpose, under the ambit of a carriage contract is not technically recognized under the laws of India.


The Government is aware of the issue, and reports by various government departments have been published regarding the same, over the years. In 2016, the Central Government under “The Report of the Committee constituted to review issues relating to taxi permits”, provided its views on the issue of bike taxis, stating “The State Transport Department may allow two-wheeler taxi permit on the lines similar to those for city taxi. This will offer an economical and convenient last mile connectivity solution to the citizens. It is highly recommended that existing private bikes may be allowed for such transportation in order to facilitate utilization of idle assets and State Governments may also consider online option to allow private bikes to convert to taxis.” The 2016 report of the Committee constituted by the Ministry of Road Transport and Highways also proposed bike sharing taxi policy guidelines to promote urban mobility. It recommended that State transport departments allow two-wheeler taxi permits to address among other things, India’s pressing last mile connectivity problems. It also recommended usage of private bikes for these purposes and an online option to allow private bikes to convert to taxis. Further, NITI Aayog's 2018 report on shared mobility refers to two-wheeler sharing as a low-cost option for first and last mile connectivity and also provides various models to implement bike sharing.


While there is no central legislation regulating bike taxis, the Central Government has recommended that bike taxis be allowed for commercial use and had also directed the State Governments to consider allowing private bikes to be converted into taxis so as to be used for commercial purposes and the regulations around the same. The matter of whether or not bike taxis are permissible, now lies in the hands of individual State Governments.


State specific regulations

On the basis of the above recommendation, various state governments such as those in Mizoram, West Bengal, Haryana and Goa have made regulations in order to regulate bike taxis.


The State Transport Authority of Mizoram was one of the first to allow bike taxis to operate in 2016. Local requirements for operation of bike taxis include two-wheelers to be 125 cc or above and for the driver to wear a yellow helmet (headgear) with 'Taxi' clearly written in red colour on the front side while the registration plate should also be of yellow colour. Any scooter or motorcycle which is not older than 2 years can be used as a bike taxi once a permit is granted.


After receiving multiple proposals to allow the use of bikes as taxis, the Government of West Bengal has allowed for bike taxis to be brought under the ambit of carriage contracts. The Government of West Bengal had sought proposals from the public and on the basis of the proposals received and the recommendation by the Central Government, bike taxis are now allowed to be registered as contract carriage as provided in the Act. Per the rules laid down by the West Bengal State Traffic Department, the driver is required to provide a helmet to the pillion rider and the pillion rider is permitted to only carry minimal baggage. There are also geographical limitations with respect to the operation of bike taxis in West Bengal.


Similarly, based on the Central Government recommendation, the Government of Haryana has also allowed for two wheelers to be brought under the ambit of a contract carriage and has permitted operation of bike taxis.


While a few Indian states have provision for bike taxis, this is however not true of most states. The Road Transport Department of Karnataka banned the use of bikes as taxis in 2016 with the rationale that they were operating under white number plates which are solely used for private vehicles and not commercial vehicles. The Regional Transport Authority had further asked aggregators to approach the Road Transport Authority of India and procure the correct permissions to operate such bike taxis.


In this background, in mid-2021, with the aim of providing first and last mile connectivity for public transport and to generate self-employment opportunities, the Government of Karnataka has introduced the Karnataka Electric Bike Taxi Scheme, 2021 (“E-Bike Scheme”). An important aspect to note here is the applicability of the E-Bike Scheme, which is limited to (i) agents and entities exclusively engaged in the business of providing electric motor cycles or electric bikes to persons or passengers desiring to hire the same for undertaking a journey and (ii) an individual who himself is engaged in the business of providing his own electric motor cycle or electric bike to persons or passengers desiring to hire the same for undertaking a journey. As is seen from the above two points, the E-Bike Scheme is only applicable with respect to electric motor cycles or bikes and not a non-electronic two-wheeler vehicle. The E-Bike Scheme puts in place specific rules for operation of such e-bikes, such as a requirement for a license to operate, a maximum distance limit of 10 kilometres between the origin and destination for a trip, barring persons under the age of 15 from hiring such electric bikes and specifications for helmets and reflective jackets to be worn by the drivers, among others. The E-Bike Scheme additionally requires that the name and details of the service provider or the individual providing the service be affixed on the exterior of the electric bike and also mandates that any service provider who operates more than 50 bike taxis adopt GPS tracking of the vehicle.


It is not surprising to see that the Government of Karnataka has specifically permitted the usage of electronic two wheelers as bike taxis. In the past few years, the Government of Karnataka has encouraged the usage and manufacture of electronic vehicles through policies and regulations. In fact, the Chief Minister of Karnataka in the budget speech of 2017-18 stated that the state government’s aim was to make Bengaluru the electrical vehicle capital of India. The Karnataka Electric Vehicle and Energy Storage Policy, 2017 was issued after this budget speech with the aim of reducing dependency on fossil fuels and bringing down pollution levels, setting up electronic vehicle manufacturing units and encouraging startups to develop business models focused on supporting economic applications for electronic vehicles. The E-Bike Scheme similarly states that the aim of the E-Bike Scheme, amongst others, is to reduce pollution in cities and promote environmentally friendly transport solutions.


While the E-Bike Scheme is a major step forward in Karnataka, the scope of the E-Bike Scheme leaves out a larger group of vehicles which could be used as a bike taxi and allow for greater ease in conveyance with respect to last mile connectivity, especially in rural areas.


Without definitive clarity on whether non-electric two wheelers can operate as a bike taxi in Karnataka, the assumption remains that operation of non-electric bike taxis is not permissible in Karnataka. Due to this lack of clarity, Uber and Ola’s bike taxi services were both claimed as illegal in 2016 when they initially started their bike taxi services in Bangalore; and again in 2018 when the Transport Department claimed that such service providers had not obtained any permits or licenses to provide bike taxi services. Vehicles operating as bike taxis were also seized by authorities.


While welcoming the E-Bike Scheme, a spokesperson for Rapido, a company providing bike taxi services in Karnataka also mentioned that they would also be approaching the Government of Karnataka to discuss permitting similar usage of non-electronic bike taxis. There is therefore an immediate need to relook at the regulations governing such non-electric bike taxis services provides. The benefits of bike taxi service providers like Uber, Rapido, Ola and Baxi can go a long way in solving the problem of the first and last mile connectivity in India.

Bike taxis in other jurisdictions

Bike taxis are fairly common to see in south - east Asian countries and countries with a large population and congestion which necessitate cheaper ways of travel for the public. Indonesia has a booming bike taxi industry especially given the general amount of congestion and traffic. Entry of aggregators such as Go-Jek in Indonesia has also lead to formalising the bike taxi sector.


Bike taxis are also a common transportation service in Brazil. While there did exist a question regarding the legality of bike taxis, in September 2019, the São Paulo Court of Justice ruled that bike taxi service would be permitted according to a 2009 federal law and that the Government could define rules to regulate ride-hailing operations using motorbikes.


Thailand has long had a system of bike taxis. The current regulation governing bike taxis has been in place since 2005 and among other rules provides regulations for setting fare rate regulating specific license plate for motorcycle taxi (yellow plate with black font), and regulating drivers wearing specified jackets. Regulations further prescribe rules for using safety equipment (e.g. installing handle for passenger, providing helmet for passenger, and etc.) and penalty for traffic role violation and inappropriate services.


Conclusion

There is no doubt that a country with the size and population of India requires multiple modes of travel and bike taxis may provide an answer in solving India’s last-mile connectivity problems and rising traffic congestion levels. Given that the Central Government too has encouraged the usage of bike taxis, it is imperative that states enact necessary rules to govern the operation of bike taxis striking a balance between safety and ease of conveyance for users.


Contributed by Samvad Partners


The above article has been authored by Ms. Neela Badami(Partner) and Mr. Kevin Robin(Senior Associate)