Stalled in Silicon Valley: Bengaluru’s bike taxi ban and the Gig Economy crisis

Bengaluru, long hailed as India’s Silicon Valley, has recently become a cautionary tale in the governance of digital-era urban services. The Karnataka High Court ordered a sudden suspension of bike taxi services offered by app-based aggregators like Rapido, Ola and Uber on June 16, 2025, citing violations under Section 93 of the Motor Vehicles Act 1988. The decision pointed out that bike taxi services don’t have the required licences, which technically makes them illegal under the existing transport rules. 

The judgment may be legally sound, but its real-world impact has been far-reaching. Thousands of gig workers who relied on these platforms for their primary income have been left without a safety net. Commuters - especially students, working professionals and residents in poorly connected areas have also found themselves stranded or forced to pay higher fares for alternative options like autorickshaws. This disruption offers an urgent opportunity to reassess how Indian cities regulate fast-evolving sectors like platform-based mobility and labour.

The Human Cost of an Abrupt Policy Shift

The court’s order has effectively shut down a fast-growing mobility service that had become a vital part of Bengaluru’s transport ecosystem since 2021. The low operating costs of bike taxis and flexibility made them particularly useful in navigating the city’s congested streets and servicing its underserved outer zones.

This ban is not just a policy change but an income shock for riders. Internal estimates from industry consultations suggest that most bike taxi workers earned Rs 30,000 to Rs 35,000 per month. These workers, often from low and middle-income backgrounds, had built livelihoods around the autonomy of gig work. But, unlike traditional employees, they lack access to unemployment benefits, health insurance or retirement savings. The sudden ban has laid bare the economic vulnerability inherent in the gig economy in the absence of legal recognition and social protections. 

India’s gig workforce is expected to grow exponentially. According to NITI Aayog’s 2022 report, India’s Booming Gig and Platform Economy, the country had approximately 7.7 million gig workers in 2020–21. This number is projected to reach 23.5 million by 2029–30. Despite this surge, gig work remains largely unregulated. While the Code on Social Security (2020) introduced by the central government formally recognises gig and platform workers as a distinct category, implementation has been piecemeal and meaningful safeguards remain absent.

A Missed Chance to Regulate, Not Ban

To its credit, Karnataka has recently proposed a state-level welfare bill for gig and platform workers. The bill outlines measures such as a dedicated social security fund, contributions from aggregator platforms and formalised registration mechanisms. However, the current bike taxi ban suggests that operational frameworks for implementing these measures are either not in place or not coordinated across departments.

Rather than a complete shutdown, a phased transition could have been pursued. Regulatory systems involving licensing procedures, safety standards, rider verification and aggregator accountability could have been introduced with clear timelines and implementation plans. This would have ensured legal compliance while preserving livelihoods and urban service continuity. Instead, the lack of institutional readiness turned what could have been a reform opportunity into a crisis of trust between the state, workers, and platforms.

The situation also reveals a deeper policy problem: our inherited classification of work as either “formal” or “informal” no longer reflects the reality of platform-based labour. Gig work is formal in structure, it is app-based, data-driven and commercially integrated. But it is informal in the absence of secure wages, contracts or welfare rights. This hybrid nature demands a new policy lens that embeds economic security into flexibility.

Commuters and Climate: The Hidden Costs

The impact of the ban extends to consumers as well. With bike taxis off the roads, commuters, especially those in peripheral and semi-urban pockets, have reported longer wait times and rising fares for alternative options like autorickshaws and cabs. In a city already struggling with inefficient public transportation and worsening congestion, the loss of a last-mile solution has been keenly felt.

What is also overlooked is the environmental implications of sidelining two-wheeler taxis. According to the International Council on Clean Transportation (ICCT), motorcycles emit roughly one-third the CO₂ per passenger-kilometre compared to private cars in congested urban areas. Shared, app-based two-wheeler services thus represent a relatively low-emission and space-efficient mobility option. As India moves toward its net-zero emission goal by 2070, dismissing such sustainable solutions without considering regulatory alternatives could be counterproductive.

Bengaluru’s Moment to Lead

This crisis is not just about mobility. It is a reflection of the larger challenges Indian cities face in governing innovation. With its dense startup ecosystem and digital infrastructure, Bengaluru is uniquely positioned to pilot integrated, inclusive governance models that other cities can emulate. But leadership in innovation must be matched by leadership in policy.

The immediate path forward requires regulatory clarity. Karnataka’s transport and labour departments must work together to frame actionable and time-bound licensing norms for bike taxis, drawing from national legal frameworks. These rules should be communicated transparently to aggregators and workers, with appropriate support mechanisms during the transition phase.

At the national level, states must operationalise the Code on Social Security by setting up dedicated gig worker boards, enabling portability of benefits, and mandating data-sharing from aggregator platforms. This is not just about worker rights, it is also about legal certainty for businesses and stable services for consumers.

Bengaluru’s bike taxi ban should not be dismissed as a minor regulatory blip. In fact, it is a test case for how Indian cities manage technological disruption, economic inclusion and labour security in the digital age. The challenge is not whether to regulate platform-based sectors but how to do so without compromising flexibility, equity or sustainability.

If met with collaborative action across state departments, industry stakeholders and civil society, this disruption can be transformed into a blueprint for reform. Bengaluru can still lead, not just as a technological innovator but as a model for inclusive urban governance. The question is whether policymakers will seize this moment to act.