Indian Capital Delhi bans Uber's surge pricing

India's capital city, Delhi, has banned Uber's surge pricing.

Uber increases prices at times of high demand for its services – aka “surges” - citing the laws of supply and demand as justification.

But Arvind Kejriwal, chief minister of the National Capital Territory of Delhi, let the city know of the ruling in a pair of Tweets.

Surge pricing is daylight robbery. No responsible govt can allow that(1/2)

— Arvind Kejriwal (@ArvindKejriwal) April 20, 2016

Some taxis saying they will not provide cab if they are not allowed to loot. This is open blackmailing n govt will not let that happen(2/2)

— Arvind Kejriwal (@ArvindKejriwal) April 20, 2016

Surge pricing has become an issue in Delhi for two reasons. Firstly, some train services were disrupted by floods.

Secondly, the city has just adopted an odd/even scheme for private cars that means vehicles with odd-numbered licence plates are allowed on the roads on odd-numbered days, while even-numbered cars get to take to the road on even-numbered days.

The odd/even scheme was adopted to curb pollution in the city and has had the entirely predicable effect of driving lots of people into cabs instead of their own cars. Uber and local clones have taken advantage of the increased demand for their service with increased pricing.

Hence the ban on surge pricing.

Uber appears to have had advance warning of the ban, and has responded by arguing that if it can't charge surge pricing, it will have fewer cars available.

Given the threat to the livelihood of our partners, at the expense of reliability, we are temporarily suspending surge with immediate effect

— Uber Delhi (@Uber_Delhi) April 18, 2016

No surge means that availability and reliability will take a hit. We're working hard on getting more cars out on the road. Bear with us.

— Uber Delhi (@Uber_Delhi) April 19, 2016

India has wholeheartedly embraced startup culture, but as its expulsion of Facebook's Free Basics shows is also wary of foreign firms dominating its markets. Throw in the fact that Delhi is not exactly short of transport services – you'll find hundreds of cabs and auto-rickshaws sitting idle in busy places like train stations or tourist hotspots – and it's clear this decision has political and cultural nuances galore. ®