Navigating the Law Related to Ride Sharing Business in Nepal

The emergence of ride-sharing services signifies a change in the global transportation landscape. Globally, ride-hailing services such as Uber, Lyft, and similar platforms have revolutionized transportation by offering reasonably priced and practical options for transportation. Services like Pathao and Indrive have sprung up in Nepal to effectively handle transportation needs. In light of this development, this article seeks to examine the law that currently governs ride-sharing business in Nepal.

 

 

The year 2017 saw the release of the first ride-sharing app i.e. Tootle in Nepal. At the time, there was no particular law addressing the ride-sharing industry in Nepal. Conventional transport service providers frequently considered ride-sharing platforms to be engaging in unlawful passenger transportation activities. Private vehicles are still prohibited from being used for public transportation, as per Section 8 (2) of the Motor Vehicles and Transport Management Act, 1993 (2049). As ride-sharing business models, which often involve private individuals using their vehicles to transport passengers, the Act inadvertently puts a restriction on Nepal's ride-sharing industry. 

 

The Motor Vehicles and Transport Management Act, 1993 can be accessed through following link: https://www.ccwb.gov.np/uploads/Resource/Lawpolicies/Act/motor-vehicles-and-transport-management-act.pdf

 

 

 

3.1  Bagmati Province Vehicle and Transportation Management Act, 2019 (2075)

Bagmati Province Vehicle and Transportation Management Act, 2019 (2075) that was implemented on 1 February 2019 was the first legislation of Nepal that recognized the ride sharing business through provincial law. Section 13(4) of Bagmati Province Vehicle and Transportation Management Act, permits private vehicles with standard number plates to operate in public transportation through ride-sharing apps, marking a significant departure from federal law. Act can be accessed through the following link. Please note the Act is in Nepalese Language: http://surl.li/slzwrx

 

3.2 Gandaki Province Transportation Management Act, 2019

Similarly on 18 October 2019 (2076/07/01) Section 13(4) of the Gandaki Province Transportation Management Regulation Act, 2019 (2076) acknowledges the transformative impact of ride-sharing and allows private vehicles for public transportation with specific regulations for safety and oversight, showcasing Gandaki Province's proactive stance towards innovation. The Act can be accessed through the following link. Please note the Act is in Nepalese Language: http://surl.li/xlqjqa

 

3.3 Patan High Court’s Judgement

Patan High Court on date 12 February 2020 (2076/10/29) in the case of Akhil Nepal Labor Taxi District Committee v. Ministry of Physical Infrastructure and Transportation (Writ No. 076-WO-0392), the court addressed a petition from the Taxi Association regarding alleged illegal passenger transportation by private vehicles. The decision underscored the necessity for adaptable legal frameworks to accommodate evolving technologies like ride-sharing. It acknowledged the challenges presented by ride-sharing apps within prevailing federal laws such as the Transportation Management Act of 1993 (2049) and highlighted the law inadequacies in regulating such services. The court stressed the importance of federal regulations to uphold public safety, advocating for collaborative efforts between ride-sharing companies and governments to formulate comprehensive policies. This judgment allowed for the operation of ride-sharing businesses and also instructed for the amendment and implementation of relevant laws.

Copy of Judgement is attached here: Akhil Nepal Labor Taxi District Committee v. Ministry of Physical Infrastructure and Transportation (Writ No. 076-WO-0392).

 

3.4 Recognition of Ride-Sharing Business an Industry by Industrial Enterprises Act, 2020

On 1 February 2024, the government officially recognized ride-sharing services as a service-oriented industry under the Industrial Enterprises Act, 2020 (2076). This amendment, published in the Nepal Gazette, granted legal status to ride-sharing companies, affirming their place within the industrial sector. The Gazette can be accessed through the following link. Kindly note the Act is in Nepalese Language:  http://rajpatra.dop.gov.np/welcome/book/?ref=25527

 

 

The Federal Ministry of Physical Infrastructure and Transport is in the discussion phase and has formulated draft on nationwide guidelines to regulate ride-sharing services, aiming for clarity and standardization. These guidelines come with their own set of legal challenges, particularly due to existing federal i.e. Section 8(2) of the Motor Vehicles and Transport Management Act 1993, prohibiting private vehicles to use for public transport. Amendment of the main Federal Act is deemed necessary for smooth guideline implementation and operate the ride sharing service business freely without any legal questions. 

To conclude, ride-sharing business have the potential to play a transformative role in Nepal's transportation ecosystem, offering a scalable, efficient, and sustainable solution to urban mobility challenges. Realizing this potential, requires collaboration, innovation, and a supportive legal landscape that balances the interests of all stakeholders. 

 

Date of Publication: 15 October 2024

 

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