Uber has to limit surge pricing and comply with key rules set by Karnataka for taxi aggregators after the Karnataka High Court rejected its plea challenging the state’s authority to regulate it. The High Court, on Thursday, upheld Karnataka’s right to frame rules for ride-hailing apps, but also said the state should encourage and promote startups in the taxi sector.

The judgement is a setback for both Uber and Ola as it would force them on the back foot in some other states that, too, are applying pressure on the companies to comply with local regulations. Maharashtra has set similar guidelines for taxi aggregators and Delhi and West Bengal are in the process of framing rules, as is the Union government.

A spokesperson for Uber said the company was yet to receive a copy of the judgement and would decide on further steps after studying the order. Ola, India’s largest cab aggregator, declined comment.

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