Kathmandu. Ride-sharing has emerged as an important means of employment and entrepreneurship in Nepal over a decade. This digital technology-based transportation service has been providing easy, affordable and fast transportation service to millions of youths as well as earning millions of youths.

The rise and expansion of ride-sharing companies have revolutionized the gig economy, fueling investment, innovation, and development of digital services. But in recent years, stakeholders have started to express doubts that the ride-sharing business, which is considered a major pillar of the gig economy, will shrink.

The gig economy in Nepal started in 2010 through Foodmandu. Later, platforms like e-Sewa and Khalti have also helped. However, it has now expanded through ride-sharing. Tootle and Pathao have made a huge contribution to the expansion of the gig economy. Ride-sharing became an effective and powerful means of transportation for those who did not have access to public transport and could not afford to buy a vehicle. According to experts, more than 10 lakh consumers are currently using this service daily.

Especially after the corona epidemic, its expansion is happening not only in Nepal but in most countries of the world. The gig economy seems to be trying to bring Nepali youth and marginalized communities into the labor market. At the same time, it has also helped in the creation of a balanced labor market. According to a 2024 study report by Nepal Business Forum, the contribution of the gig economy to Nepal’s GDP is 7 percent.

Stakeholders have said that some of the provisions of the law were not practical when the law was formulated almost 10 years after the service was started in Nepal. KATHMANDU: The government has published the ‘Digital Mobility Service Operation Standard-2082 (Draft)’ with an objective of regulating the ride-sharing business. They believe that some of the provisions should be made practical.

Founder of Tootle Nepal, Sixit Bhatta, a ride-sharing company, said that after a decade of starting the business, the law enforcement has made it easier for all the stakeholders. Stating that there was a time when the business should be operated or not, the process of formulating laws and systematizing them has been positive, he said, adding that practical aspects should be emphasized while formulating laws.

Bhatta, founder of Tootle, said that although the provisions mentioned in the draft and making uniform mandatory for drivers are positive initiatives, there may be difficulties in its implementation. “This business was developed with the idea that working people should be able to work part-time. That was our thinking at the time, so the system of making uniforms mandatory for everyone may not include part-time workers,” he said.

Yango Ride Nepal’s Country Manager Santosh Pandey said that the ride-sharing business has made the gig economy bigger and thousands of youths are involved in it. He claimed that a large number of youths involved in the draft would be rendered jobless due to the provision of compulsory uniforms.

“Currently, more than 70 per cent of drivers are working part-time. More than two lakh drivers are involved in this. If uniforms are made mandatory, they will be averse to it,” Pandey said. According to him, people from government employees to those involved in various professions are also partially involved in ride-sharing and this number is more than 70 percent.

“On average, they take only two to four rides a day. If uniforms are mandatory, they will have to leave work, so it can be practical,” Pandey said.

The stakeholders have been saying that the provision of keeping only a maximum of 10 percent of the fare received by the service provider is impractical. They argue that this ‘cap’ in the draft will discourage both domestic and foreign investors. Digital platforms and startups require a large investment in the initial stage, so the cap on commission can lead to a longer return on investment.

Yashu Thakali, Chief Executive Officer of Pathao Nepal, said, “Some of the provisions in the draft seem to be an attempt by the regulator to control the business, which is not appropriate in a liberal market economy. But just as the provisions regarding rider and driver safety, insurance, data security, etc., are appropriate. He also claimed that there is no cap on commission in the ride-sharing business in other markets of the world.

Thakali believes that in an open market economy, price and commission should be determined by market competition. He argues that the regulator should not dictate how to conduct business.

Currently, the company is charging a favorable commission (dividend) fee. For example, Pathao Nepal is charging the highest commission up to 20 percent while Indrab is taking 10 percent commission. Similarly, Yango Ride Nepal and Uber ‘Taximandu’ are working without commission.

Thakali, chief executive officer of Pathao Nepal, said that the fare rate mentioned by the government in the draft for two-wheelers and four-wheelers has also been reduced. According to him, the rate included in the draft of the government is low due to the rising fuel prices and inflation in recent times.

“The government of Gandaki Province had earlier fixed Rs 157 for the initial fare of Rs 60 and Rs 97 for two-kilometre journey,” he said. After that, the fare was fixed at Rs 48.50 per kilometre. So now the fare is lower than that, which I think is not practical. ‘

Officer Thakali claimed that the fee mentioned in the case of ‘surge charge’ was also not practical. “Since the business is driven by supply and demand, it benefits both drivers and passengers. But if we set a certain limit, it will not benefit both of us,” he said.

According to Thakali, the draft has also mentioned that the provision of allowing the service providers to charge only 20 per cent of the fare on the fixed fee for the management of night service, environmental adverse condition and even the time of sitting is less than the existing provision. He stressed on the need to adopt flexibility in this system as it would not attract drivers to provide service during night and environmental adversity.

Proprietor of ride-sharing company Taximandu, Arjun KC, however, said that the introduction of the new law is a fruitful matter. Taximandu has now brought American company Uber to Nepal as a strategic partner. So far, taximandu, which was limited to four-wheelers, has also entered two-wheelers after the entry of Uber.

According to him, the government’s decision to impose five percent VAT on ride-sharing services from the upcoming fiscal year’s budget at a time when it has been operating without concrete laws for a long time has also become the basis for bringing this sector under the purview of the law.

“For almost a decade, this business has been operating without any concrete laws. The way the law is being formulated to regulate it, albeit belatedly, is a matter of achievement for us,” he said. However, he argues that even if there is disagreement on some of the provisions in the draft, it can be amended after the law is made. “The law will not come forever, we can amend the impractical issues once the law is enacted, but it is necessary to implement the law first,” he said.

According to KC, after the implementation of the law, the issues not included in the law will also have to be amended and incorporated. “For example, ride-sharing drivers are now using their own vehicles. The service provider does not provide vehicles. In the coming days, there may be a situation where the service providers themselves will provide vehicles, we should think like that,” he said. He suggested that we should wait for the law enforcement aspect rather than the issues in the law.