(MENAFN- Live Mint)

NEW DELHI: Commuters in Maharashtra, long frustrated by unreliable buses and crowded commutes, may soon find daily shuttles safer, more reliable, and easier to book. And app-based shuttle operators in the state may finally gain legitimacy.

A new draft policy-the Motor Vehicle Aggregator Rules, 2025-proposes to formally bring private buses and contract carriages under the app-based aggregator framework for the first time. A copy of the draft, released on Saturday and reviewed by Mint but not yet public, requires operators to hold valid permits and bars vehicles older than eight years from use.

Also Read | Bengaluru metro: Why your commute is getting costlie

If implemented, the move could finally legitimize business-to-consumer (B2C) shuttle models like Uber Shuttle, Cityflo and Chalo, which have long operated in a regulatory grey zone. Both Uber and Cityflo have faced enforcement action in Mumbai in recent years, with authorities seizing buses and issuing fines for alleged permit violations.

“For many daily commuters, app-based shuttles offer a middle ground-more reliable and comfortable than public buses, but still far cheaper than cabs," said Amit Kaushik, an independent automotive industry expert.“They are especially useful for people living in remote parts of cities that are not well connected by metro or local trains, giving them a more dependable way to get to work."

Queries sent to Cityflo and Uber did not immediately elicit a response.

Draft rules signal long-awaited legitimacy

Shuttle services, where passengers share rides along fixed or semi-fixed routes, typically in buses, for quicker and cheaper commutes, have struggled to take off in Maharashtra despite strong commuter demand. Operators typically study public transport gaps, commuter density, and corporate clusters before launching routes, with Mumbai, Delhi, and Bengaluru being natural markets due to high car ownership and severe congestion.

Seat prices in these services typically range from ₹120– ₹180, compared to ₹15 on public transport.

Yet Uber Shuttle, which launched in Mumbai in 2021, was forced to shut operations in the city and Hyderabad in July 2025, citing regulatory hurdles, low ridership, and high costs. Maharashtra's transport department said Uber and other operators were running without valid stage carriage permits, collecting over ₹12 lakh in fines and seizing 125 buses in a state-wide crackdown.

Cityflo, which runs 450 buses across Mumbai, Hyderabad and Delhi, also faced scrutiny despite claiming compliance.

There weren't any earlier Maharashtra rules specifically covering app-based buses or shuttles. The previous state policy, Aggregator Cabs Policy 2025, issued on 21 May 2025, governed only cab and auto aggregators, not buses.

Also Read | Govt plans 3,000 electric buses for Mumbai, Pune under PM E-Driv

The new draft, issued by the Maharashtra Transport Department, is the first to explicitly bring contract carriage and passenger buses under the aggregator framework.

The new draft seeks to close a long-standing regulatory loophole .

“They finally give long-awaited legitimacy to app-based bus and shuttle models like Cityflo and Chalo. By bringing contract carriage buses under a regulated digital framework, the state is signalling openness to public-private collaboration in urban mobility," said Kaushik.

Legal experts say clarity is crucial.

“The draft goes a long way in addressing ambiguity around the legality of using contract carriage permits for app-based operations," said Athira T S, associate partner at King Stubb & Kasiva, a law firm.“This regulatory clarity can make the B2C bus-shuttle model more financially viable by reducing compliance risk, enabling long-term fleet investment, and boosting confidence among investors and commuters."

However, while the draft provides much-needed clarity, some provisions could trigger challenges.

“The eight-year vehicle cap could be contested as being economically unviable and unconstitutional. Fare-setting mechanisms may also lead to disputes over base fare determination. Potential overlaps with state transport undertakings (STUs) on certain routes could become another legal flashpoint," said Rohit Jain, managing partner, Singhania & Co, a law firm.

The draft rules go beyond legitimizing app-based buses. They set a fare determination mechanism, capping surge pricing at 1.5 times the base fare during peak hours or festive demand, and lay down conditions around driver working hours, including a maximum of 12 hours per day with at least 10 hours of rest.

Aggregators will also be required to obtain licences from the State Transport Authority or respective RTOs, backed by a security deposit and licence fee linked to fleet size.

The Maharashtra transport department has invited public objections and suggestions until 17 October 2025, after which the rules are expected to be finalized, though no firm timeline has been announced for notification.

Opportunities-and new obligations

For operators, the rules offer legitimacy but also a tougher compliance bar.

They can now provide scheduled, tech-enabled, point-to-point services under a legal umbrella-appealing to commuters willing to pay more than public transport but less than taxis. However, compliance requirements such as driver training, insurance, and strict pre-booking norms could raise operating costs.

“Explicitly bringing buses and contract carriages into the aggregator fold gives long-awaited legal cover, reducing shutdown risk and enabling route and fleet planning," said Pratik Shah, Partner at EY.“But the eight-year age cap and fare bands add cost discipline that may strain smaller startups."

Shah added that while the draft improves bankability and investor confidence, up-front licence fees and recurring compliance costs mean scale will favour well-funded operators.“Fare guardrails point to volume-over-margin models, but Mumbai and Pune's commuter base can still support sustainable scale," he said.

Investor interest and market potential

Venture capital investments in India's shuttle sector have totalled about $224 million so far, though outcomes have been mixed.

B2C-focused operators such as Shuttl (acquired by Chalo in 2021) and ZipGo (shut down in 2019) struggled to sustain operations despite raising significant capital. Cityflo continues to operate on a smaller scale.

By contrast, B2B models like Routematic and MoveInSync have drawn steadier investor interest, together raising over $57 million. Their corporate tie-ups provide predictable demand and a regulatory shield, advantages that B2C services lack.

Also Read | India's e-bus market rebounds: Why Delhi is outpacing Maharashtra, Tamil Nad

Executives in the sector estimate that India's urban shuttle services could have a total addressable market of more than 100,000 buses, representing a revenue opportunity of around $3 billion given current commuter demand in metro and tier-I cities. Separately, intercity bus services are projected to reach $13 billion in value by 2027, according to a 2021 Redseer report.

Industry executives estimate that cities like Mumbai and Delhi alone require around 30,000 buses each, though deficits remain.

The road ahead

The draft rules could reshape how private operators fit into Maharashtra's urban transport mix. But execution will matter as much as intent.

Implementation details, including fare regulation , enforcement consistency and coordination with state undertakings, will determine whether the policy truly opens a new path or creates more bureaucratic detours.

For operators battered by shutdowns and regulatory crackdowns, the draft marks a long-awaited opening to build app-based shuttle models within the law.

MENAFN12102025007365015876ID1110185000