Stranded Innovation: Legal Grey Zones Holding Back India's Bike Taxi Revolution

The recent judgment by the Karnataka High Court on June 13, 2025, that unless the state frames a policy under Section 93 of the Motor Vehicles Act, all bike taxi operations must cease from June 16, 2025, has led to a complete halt in bike taxi services across the state, triggering widespread debate over the legal status and future of bike taxis in India. Despite offering comfort, convenience, and affordability to thousands of users, bike taxis have been abruptly suspended, raising questions about the legal and regulatory environment governing such services. Research into the court's reasoning reveals several factors: the lack of a clear regulatory policy for bike taxis in Karnataka, the government's explicit disinterest in drafting such a policy, safety and security concerns, and strong opposition from local auto unions. (The Hindu, 2025) These collectively point to one major problem - regulatory uncertainty.

Interestingly, Karnataka is not the only state where bike taxi services have been put on hold. Delhi, Maharashtra, Tamil Nadu, and Haryana have also suspended operations or are in legal limbo. However, unlike Karnataka, some of these states have at least expressed interest in drafting policies, even if none have yet materialized into clear, enforceable frameworks. What adds to the concern in Karnataka's case is the state's current stance of not pursuing regulation, despite the important role bike taxis could play in improving urban mobility and supporting employment generation.

According to industry estimates, the Indian bike taxi market was valued at $50.5 million in 2021 and is projected to reach a massive $1.46 billion by 2030, growing at a compound annual growth rate (CAGR) of 48.5%. In 2023 alone, the number of bike taxi rides reached 318 million, and platforms like Rapido reported handling over 320,000 daily rides across more than 100 cities, powered by 1.5 million registered riders. This growth underscores the rising demand and economic significance of the sector.​​ (Allied Market Research, 2024)

This issue also ties into a much larger and pressing legal debate, whether private vehicles (white plate) can be used for commercial purposes, especially in the gig economy. Companies like Amazon, Flipkart, Zomato, and Zepto widely deploy delivery workers who use their personal bikes to deliver goods. Under the Motor Vehicles Act, 1988, this is technically illegal unless the vehicle is registered as a transport vehicle. According to Section 66 of the Act, no person shall use a motor vehicle for commercial purposes without a permit. Yet, these companies operate freely. How?

The answer lies in a contractual loophole. These companies argue that they are not hiring the vehicle; instead, they contract the rider's services. This means the company is not directly operating the vehicle; only the gig worker is. Because there is no specific ban on white-plate vehicles delivering food or packages, this area falls into a legal grey zone. In contrast, several states have issued clear restrictions on the use of private bikes for passenger-carrying purposes, citing regulatory and safety concerns, such as bike taxis. This double standard raises valid questions. Why are delivery operations tolerated under such ambiguity while ride-hailing bike services are penalized?

To explore this legal inconsistency further, we extended our research into other industries where personal property is used for commercial purposes, and three major use cases emerged: Airbnb (house rentals), cloud kitchens, and carpooling apps. In each case, individuals used personal property, homes, kitchens, and vehicles for income generation.

• Airbnb faced global legal battles over residential zoning violations, tax avoidance, and neighborhood complaints. Cities like New York, Paris, and Mumbai responded with host registration rules, rental caps, and mandatory taxes.
• Cloud kitchens operating from home kitchens in India, especially in Delhi and Mumbai, triggered concerns about hygiene, fire safety, and waste disposal. Authorities responded by enforcing FSSAI licenses, fire safety NOCs, and relocation to commercial spaces.
• Carpooling apps like BlaBlaCar faced RTO scrutiny in India and abroad for collecting fares using private vehicles, violating transport regulations. Some cities allowed carpooling only when trips shared the same destination and banned dynamic pricing, but India still has no standard policy for paid carpooling.

In most of these cases, authorities responded with regulations and adopted a more balanced approach, rather than resorting to prohibitive actions. Airbnb now functions under specific local laws. Cloud kitchens have moved to commercial zones. Carpooling is tolerated. The lesson is clear: when personal resources are used for public service, they must be regulated, not shut down. This approach not only protects users and workers but also integrates innovation into the legal framework.

Bike taxis deserve the same treatment. India must look to global best practices, where countries have not only legalized but also successfully regulated bike taxi ecosystems:

• Indonesia: Platforms like Gojek and GrabBike operate under Ministry of Transportation rules, requiring driver licensing, annual vehicle inspections, and trip data sharing with the government.
• Philippines: Initially, piloted services like Angkas, which are now integrated into the national public transport policy.
• Thailand: Enforces strict licensing (“Win” licenses) and uniform codes for bike taxi drivers.
• Vietnam: Integrates GrabBike into its urban transport plans.
• Uganda: SafeBoda riders undergo mandatory training, are insured, and follow city safety laws.
• Bangladesh: Requires platform registration and vehicle compliance for services like UberMoto and Pathao.

These countries have comprehensive frameworks that regulate driver eligibility, vehicle standards, fare caps, insurance, data compliance, and even worker rights. Riders undergo background checks and safety training. Platforms provide insurance, helmets, and in some cases, even health insurance and savings options. Such measures enhance consumer trust and service quality.

Meanwhile, India remains fragmented and hesitant. Without a pan-India policy, states continue to issue inconsistent and often contradictory directives. This disjointed approach hampers innovation, hurts gig workers, and erodes urban transport efficiency.

Safety statistics further highlight the importance of regulation: In 2022, 44.5% of road fatalities (Mint, 2023) in India involved two-wheelers, with over 69,000 deaths linked to such vehicles. In Karnataka alone, dangerous stunt infractions like wheelies more than doubled from 341 in 2023 to 775 in early 2025 (Times of India, 2023), according to Bengaluru traffic police. Lack of training, poor enforcement, and helmet non-compliance are rampant. A New Delhi study even found 70% of motorcycle helmets were counterfeit or non-compliant. (Observer Research Foundation, 2023)

The Karnataka High Court's decision, though legally grounded, highlights a larger systemic failure a failure to adapt to new-age services through appropriate regulation.

The future of urban mobility in India depends not on banning what is innovative, but on building the legal and regulatory infrastructure to support it. Just like Airbnb was not banned but regulated, and cloud kitchens were not closed but shifted, bike taxis must be integrated into India's policy vision.

Clear, consistent national rules would resolve concerns about safety, legality, and fair competition. It would also open economic opportunities for millions of gig workers and reduce emissions. Bike taxis emit 60% less CO₂ than diesel autos, according to environmental studies. (KPMG India, 2024)

India must act now. Drawing inspiration from countries like Indonesia, Vietnam, and the Philippines, we must craft a flexible, enforceable, and inclusive national policy for bike taxis.

Until then, the system will remain unjust where deliveries thrive in a legal grey zone, while transport innovation is left stranded at the kerb.

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