India is considering a major reduction in the number of vehicles a business needs to qualify for a cab-rental licence, as part of a proposed overhaul of rules covering both self-drive hire and cars supplied with a driver.
Under the draft scheme, an operator would need at least five vehicles in total, rather than the current minimum of 50. At least two cabs would still have to be stationed at each place of operation. The requirement for branches in five tourist cities would also be removed.
The Ministry of Road Transport and Highways announced the proposed reforms on 12 November. They remain a draft, not a change that businesses can already rely on. The government has invited feedback, and the final rules could differ from the version under consideration.
The proposal is intended to replace a framework dating from 1989. Its lower fleet threshold could make it possible for a smaller company to seek a licence without first assembling dozens of cars. But a smaller fleet would not remove the other conditions attached to running a rental service.
One licence within a state or territory
The draft would replace separate main-office and branch licences with a single electronic licence valid across the relevant state or union territory. Approved operating locations could include airports, railway stations and bus terminals.
The proposed licensing fee is a uniform 25,000 rupees, regardless of fleet size. The licence would apply within the state or territory concerned; it should not be confused with a single nationwide licence.
The change in the minimum fleet would apply alongside the requirement to keep at least two cars at each operating location. A business planning several locations would therefore need to consider both the total number of vehicles and where they are stationed.
Licence applications and renewals would have a proposed 60-day processing period. Requests to add or remove vehicles or operating locations would be subject to a 30-day deemed-approval mechanism, under which an application would be treated as approved if no decision were made within that period.
Electronic registers linked to the VAHAN vehicle-record system and automatic retrieval of information are also part of the proposed administrative changes. The aim is to reduce the paperwork involved in maintaining vehicle records and dealing with licensing authorities.
Conditions for cars and drivers
The draft would cover vehicles rented without a driver as well as those supplied with one by the operator. For customers, that distinction affects whether they drive the vehicle themselves or use a driver provided with the hire.
Rental vehicles would need location-tracking devices and first-aid kits. Operators would also have to maintain a website and provide round-the-clock grievance support, along with emergency repair and towing assistance.
The proposed requirements extend to insurance. Vehicles would need comprehensive cover for the renter, driver and other occupants up to the vehicle’s passenger capacity. Registration, fitness and other vehicle compliance requirements would still matter alongside the new fleet threshold.
Drivers supplied by an operator would need police verification. The draft also provides for driver welfare under India’s Code on Social Security, 2020. These provisions concern drivers provided by the rental business; they should not be read as a guarantee of a particular outcome for every driver or passenger.
On enforcement, operators would be given time to correct non-material violations before suspension or cancellation is considered. An appeal mechanism with electronic hearings is also proposed. Specified serious offences involving a rental vehicle or an operator-provided driver could reduce the validity of an operator’s licence.
What happens next
Feedback on the draft has been invited until 5 December, and January 2027 has been identified as the intended implementation period. That timetable depends on the scheme being finalised and notified; the detailed provisions may change before then.
The reform would lower one substantial entry barrier, but it would not determine how many businesses enter the market or whether rental prices fall. The final licence conditions, the cost of compliant vehicles and insurance, and how state and territory authorities administer the scheme will all affect what the proposal means in practice.
