Despite the Supreme Court's directive to introduce ride-hailing guidelines promptly and the prime minister’s instruction not to hold any files for more than a week, there are no signs of swift action.

In January, the top court directed the government to expedite legislation governing ride-hailing services as their popularity grows.

In its recently released full-text verdict, the Supreme Court acknowledged that ride-hailing services have provided employment to many drivers and established a direct relationship with customers.

In February last year, the government amended the Industrial Enterprises Act 2020, officially recognising ride-hailing businesses as service-oriented and granting them legal status after seven years of operation in Nepal.

However, a year later, the guideline remains under discussion at the Bagmati provincial Ministry of Labour, Employment, and Transport.

“There has been no recent progress on the guidelines. We hope something concrete will come in a month,” said Birendradev Bharati, secretary at the Ministry of Labour, Employment, and Transport, Bagmati Province.

“The provincial ministry is amending the Motor Vehicles and Transport Management Act, 1993, in the current session of Parliament. Once that is completed, we will start work on the guidelines.”

Bharati added that discussions with stakeholders are ongoing.

“The guidelines will address issues in the ride-hailing sector,” Bharati said.

It will define regulations on who is permitted to participate in ride-hailing services, require foreign ride-hailing companies operating in Nepal to establish a local representative office and introduce competition regulations for new entrants.

Additionally, the guidelines are expected to include provisions for gig workers’ rights in the ride-hailing industry.

“We have also taken note of the grievances expressed by gig workers in ride-hailing services and incorporated those concerns into the guidelines,” Bharati added.

Gig workers typically take on temporary jobs in the service sector as independent contractors or freelancers.

A 2024 report by the Asian Productivity Organisation, titled Nepal’s Gig Economy and its Implications on Labour Participation and Income Distribution, highlighted that while labour participation in the gig economy is increasing, Nepal lacks a clear legal framework to govern it.

This absence of regulations leaves gig workers without adequate protections.

The gig economy operates flexibly, relying on digital platforms to match service providers with consumers. However, the report warned that a lack of legitimacy creates significant challenges, such as job insecurity and insufficient worker protections.

Nepal’s gig economy began in 2010 with the food delivery service Foodmandu and later expanded into transportation with platforms like Tootle and Pathao.

Pathao Nepal’s website states that it facilitates more than 150,000 daily rides and deliveries and has over 5 million app downloads.

On February 11, 2019, advocate Shyam Kumar Shrestha filed a writ petition in the Supreme Court demanding the revocation of Pathao Nepal’s registration. On February 27, the court refused to issue a stay order to halt its ride-hailing services.

The Supreme Court eventually revoked the petition on June 27, 2019.

The full text of the judgement issued by then-chief justice Bishwambhar Prasad Shrestha and Justice Tek Prasad Dhungana was released last month.

The Supreme Court’s directive follows the February 2020 Patan High Court order to regulate ride-hailing services. While the government included the service in the Industrial Enterprises Act, it has yet to implement a law governing the sector.

The controversy surrounding ride-hailing companies escalated after the Auditor General’s 61st annual report flagged issues such as using private vehicles for commercial purposes and not registering with the Department of Transportation Management.

The report also highlighted tax compliance concerns among ride-hailing companies.

The Motor Vehicles and Transport Management Act 1993 states that vehicles registered for private use should not be used for public transport.

Therefore, the government has difficulty collecting taxes from companies not officially registered.

Without clear regulations, ride-hailing services operate in a legal grey area, raising stakeholder concerns about worker protection, competition, and tax compliance.