The government led by Balendra Shah had pledged to fast-track regulations for Nepal's rapidly expanding ride-hailing industry. Instead, the proposed framework has become mired in the same delays that stalled previous administrations.

Government officials involved in the process say the draft has been held up by disagreements over fare caps, commission limits and the use of privately registered vehicles, with ride-hailing platforms, transport operators and other stakeholders unable to reach a consensus.

More than three months after the proposed Digital Mobility Service Operation Standards, 2026 reached the Ministry of Physical Infrastructure and Transport, it remains under review.

The government has struggled to reconcile competing interests before granting final approval, at least three officials familiar with the process told the Post.

A senior official at the Department of Transport Management said the draft is still undergoing consultations at the ministry.

"The digital mobility sector is technically complex, and every stakeholder—from ride-sharing companies and drivers to transport operators—has its own concerns. Reaching a consensus has therefore become difficult," the official said on condition of anonymity.

"While addressing the concerns of service providers and drivers, we must also protect consumers' rights."

According to officials, discussions have focused primarily on fare structures, commission rates and other operational provisions with major ride-hailing platforms, including Uber, Yango and other operators.

Under the proposed standards, the government plans to cap base fares at Rs25 per kilometre for two-wheelers and Rs55 per kilometre for four-wheelers. Night fares could rise by up to 20 percent, depending on operating conditions.

The draft also limits the commission digital platforms can charge to a maximum of 10 percent of each fare, with the remainder going to drivers.

"The ministry even proposed implementing some of the pricing provisions on a trial basis, but most ride-hailing companies opposed the idea, citing technical and financial complications," another department official said.

Another contentious issue is whether privately registered vehicles with red number plates should be allowed to provide commercial ride-hailing services.

Public transport operators have argued that if such vehicles are permitted to operate commercially, they should carry distinct identification markings.

Officials involved in drafting the standards say no consensus has been reached on the issue.

The Ministry of Physical Infrastructure and Transport published the draft for public consultation on April 20.

Prepared by the Department of Transport Management, the proposal defines ride-sharing and ride-hailing services for the first time in Nepal while establishing licensing procedures, fare ceilings, safety requirements and compliance mechanisms.

The draft introduces the broader concept of "digital mobility service", covering app-based and web-based transport platforms that connect passengers with vehicles on demand.

It also includes several provisions aimed at improving safety and social protection. Digital mobility companies would be required to provide life insurance for drivers and riders, enrol them in the Social Security Fund, and operate 24-hour emergency response and grievance-handling systems staffed by trained personnel.

To improve passenger safety, particularly for women, the draft requires platforms to allow female passengers to choose female drivers or riders.

It also proposes strict penalties for harassment, reckless driving, operating outside the digital platform and driving under the influence of alcohol or drugs. Under a zero-tolerance policy, service providers would be required to cooperate with authorities to ensure accountability and compensation for victims.

The proposal further calls for the creation of an accident fund financed through a one percent deduction from passenger fares and a 0.5 percent contribution from the daily earnings of service providers. The fund would compensate passengers, drivers and riders injured in accidents.

The draft defines ride-sharing as multiple passengers travelling in the same vehicle in the same direction to improve efficiency, reduce costs and ease traffic congestion. Ride-hailing, meanwhile, is defined as booking a vehicle—with or without a driver—through a digital platform for private use with integrated payment and tracking systems.

The government's effort to regulate the sector follows years of disputes over the legal status of app-based transport services.

When Gandaki Province introduced its Ride-sharing (Regulation and Management) Regulation in May last year, public transport operators launched protests that disrupted transport services across the province. The province formally implemented the regulation in February after months of uncertainty.

The proposed standards are expected to provide Nepal's first comprehensive regulatory framework for ride-hailing and ride-sharing services after nearly a decade of rapid but largely unregulated growth.

The absence of a clear legal framework has left passengers vulnerable to inconsistent pricing, safety risks and weak grievance mechanisms, with no dedicated authority to handle complaints.

Reports of unfair fares, misconduct and passenger exploitation, particularly during emergencies and peak travel periods, have further eroded public trust in digital ride-hailing services.

In January 2019, the government cracked down on ride-hailing platforms like Tootle and Pathao, but public pressure forced it to back down as the ride-hailing apps had changed the way Nepalis travelled.

Subsequently, in February 2020, the Patan High Court ordered the government to regulate ride-hailing services.

The ride-sharing service was then listed as a service-oriented industry under the Industrial Enterprises Act 2020.

Bagmati Province declared ride-hailing services legal in June 2022, but it did not issue any guidelines or policy. Ride-hailing companies were permitted to operate mobile apps by registering with the Transport Department.

The Motor Vehicles and Transport Management Act 1993 has mentioned that vehicles registered for private use should not be used for public transportation. The law also bars vehicle owners from using their vehicles for other than declared purposes.

The first Nepali ride-sharing app was launched in 2017.