The long-awaited law to govern and facilitate ride-hailing services—now a key mode of transport and a growing business in the Kathmandu valley—has once again slipped into uncertainty, despite repeated court orders to introduce a regulatory framework.

In February 2020, the Patan High Court directed the government to regulate ride-hailing services. Six years on, progress remains stalled. In January last year, the Supreme Court reiterated the need to fast-track legislation, underscoring the urgency of bringing the sector under legal oversight.

Yet Bagmati Province, which has been leading efforts to draft a regulatory framework, now says the process will take more time.

The province began drafting ride-hailing guidelines nearly three years ago, but frequent changes in government have repeatedly delayed progress. Officials say the latest effort has also been affected by political transition.

Hemraj Bhusal, secretary at the Bagmati provincial Ministry of Labour, Employment and Transport, said the government plans to align ride-hailing regulations with broader amendments to the Motor Vehicles and Transport Management Act, 1992.

“As the government’s policy is to promote electric vehicles in the amended Act, we plan to introduce ride-hailing provisions alongside measures to transition petrol and diesel vehicles to EVs, including tax policies and other incentives,” Bhusal said.

He added that legislation could take time as the provincial assembly only recently resumed regular sessions following the Gen Z-led protests in September last year.

“The draft of the ride-hailing working procedure has already been prepared and is under discussion among the relevant ministries,” Bhusal said.

The Supreme Court has already recognised ride-hailing as a legitimate service, citing its employment potential and direct accessibility for users. In 2023, the government amended the Industrial Enterprises Act to formally recognise ride-sharing platforms as legal business entities.

However, in the absence of clear and enforceable regulations, service providers, riders and consumers continue to face a range of problems—from inconsistent pricing to safety concerns.

Gandaki Province had briefly taken the lead by introducing ride-sharing regulations on January 29 last year, publishing them in the provincial Gazette. But the rules were withdrawn in June following protests from public transport operators.

Under the Gandaki framework, two-wheeler ride-sharing services were limited to trips of up to 20 kilometres, while four-wheelers could operate up to 50 kilometres. The revised rules also redefined ride-hailing as passenger transport facilitated through an online system and removed a controversial requirement for vehicles to display “RS” stickers.

Ride-hailing has expanded rapidly in Nepal, particularly in Kathmandu, with companies reporting more than 200,000 riders engaged in the sector, reflecting its growing role in the gig economy.

Despite this growth, policy implementation has lagged behind. The government’s policy and programme for the fiscal year 2022-23 had committed to introducing a ride-sharing law, but the Office of the Auditor General says this has not been fulfilled.

“Even though the High Court Patan issued an order on February 12, 2020 to formulate laws and regulate ride-sharing services, vehicles operating without registration—posing risks to passenger safety—have not yet been brought within the regulatory framework,” the auditor general noted in its report.

The report stressed the need for a comprehensive legal framework covering registration, operation, monitoring and inspection to ensure safe and lawful transport services.

Ride-hailing companies, too, have expressed concern over the prolonged delay, saying the lack of regulation creates uncertainty and undermines trust in the sector.

Tensions have intensified in recent weeks following repeated hikes in fuel prices. Riders have demanded uniform fare structures, arguing that disparities across platforms are creating friction with customers.

Pro-Riders Group, an informal body representing riders across companies, said that companies have adjusted fares independently in response to rising fuel costs linked to the conflict in West Asia, leading to significant price differences for the same routes.

In the absence of regulatory oversight, commuters are often left vulnerable to inconsistent pricing and safety risks. Complaints of poor behaviour, overcharging and exploitation—especially during peak hours and emergencies—have further eroded public confidence.

Both international and domestic ride-hailing platforms are currently operating in Nepal. Popular international players include Pathao, inDrive and Yango, while homegrown services such as ZumZum, Sajilo and La Basham are also active in the market.

Ride-hailing services first entered Nepal in 2017 with the launch of Tootle, a locally developed app. The market expanded in 2018 with the entry of Pathao, followed by inDrive in 2022, even as the sector continued to face legal ambiguities.

A report titled “Nepal’s Gig Economy and its Implication in Labour Participation and Income Distribution,” published by the Asian Productivity Organisation in December 2024, notes that ride-sharing platforms are expanding beyond Kathmandu to other major cities.

Pathao, for instance, plans to extend its services to 17 cities around the country. The company currently provides employment to more than 200,000 individuals, including around 190,000 motorbike riders, over 10,000 cab drivers and more than 5,000 delivery personnel. It also offers insurance coverage of up to Rs1 million in case of death or permanent disability and up to Rs100,000 for medical treatment following accidents.

Despite the rapid expansion of the gig economy, the report concludes that Nepal has been slow to formalise this emerging sector.

“The government has attempted to bring informal economic activities into the formal sector, but progress has been slow,” the report states. “There is a lack of research and clear policy direction regarding the gig economy, and a regulatory framework is urgently needed to manage its growth and protect workers.”