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Ola suggests government way to legalise bike taxis; asks banks to ease loan process for drivers

FE Online

SoftBank-backed cab and bike booking company Ola’s policy and social innovation unit Ola Mobility Institute has suggested state governments to classify bike taxis under the transport vehicle category in order to legitimise bike-taxi business in India and enable new MSMEs and large businesses to come up. "This would encourage the availability of large fleets of bikes for sharing purposes in a city, as well as the emergence of such on-demand two-wheeler businesses of all sizes – micro, small, medium, and large-scale," the institute said in a report on the significance of bike taxis in India and their economic potential. Ola currently competes with other major players such as Uber Moto and Rapido in the bike taxi segment.

Bike taxis segment in India is currently stuck due to lack of legal clarity as many state governments haven't notified policies for the same. This could be due to first, "lack of precedence stemming from technical and legal uncertainty over the classification of bikes as a transport vehicle, that is, vehicles that engage in commercial operations, and are usually identified by yellow registration," and second, "lack of clear evidence of the positive impact of bike-taxis in Indian cities," the report titled The Power of Two Wheels said.

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However, the Road Transport ministry had called permitting bike taxis to be legal. "Under the Motor Vehicle Act, 1988, the states may issue permits for taxi under section 72 and 73. Therefore it is legal for the states to issue taxi permits for all kinds of vehicles including two-wheelers," Road Transport and Highways ministry MoS Mansukh L Mandaviya had said in the Lok Sabha in December 2018 in response to a question whether bike taxis were legal in 14 states. Currently, only 13 states and union territories have defined rules for bike taxi businesses.

Ola also suggested banks to switch from asset-based lending to cash-flow based lending in order to enable people to purchase bikes through bank loans without giving any collateral and earn a livelihood. This unsecured lending to first-time borrowers entering the bike-taxi economy "may be classified as priority sector lending," Ola said. For offering loans, banks and micro-finance institutions may use "data available through digital transactions to profile the social and economic background of the borrowers." Bike taxis in India have the potential to generate more than 2 million livelihood opportunities and revenue of $4-5 billion while the industry is likely to grow to $90 billion by 2030.