Rent-a-Cab rules eased, fleet can have just five cars

NEW DELHI: The road transport and highways ministry has proposed a relaxation of rules for setting up car hire businesses, including a reduction in the minimum fleet requirement to five vehicles from 50. It said that the new rules would apply to both self-drive cars and vehicles hired with a driver.

The government believes lowering the threshold will encourage small entrepreneurs, startups and local operators to enter the market. Existing operators will also be able to expand into new locations using a smaller fleet of just five cars. The proposals are part of the draft Rent-a-Cab Scheme 2026, which is set to replace the country's 37-year-old regulatory framework from 1989. Under the updated guidelines, the ministry has also made provisions for online licensing, time-bound approvals, stringent safety, insurance and operational requirements and a formal grievance redress mechanism.

The proposed scheme is expected to come into force in January 2027. In 2021, the ministry amended the scheme to cover battery-operated taxis and those running on green fuels such as ethanol or methanol. The draft scheme, notified recently, proposes to fix the licensing fees at Rs 25,000 irrespective of the fleet size. It also introduces a nine-year age limit for vehicles, while the validity of the licence has been kept at five years.


The ministry has invited comments on the draft scheme until December 5, after which the final scheme will be notified. It explicitly states that all rented vehicles must have a valid registration, no pending challans, fitness and pollution under control certificates, all taxes paid and valid insurance for all occupants, including the driver.

The scheme also proposes to cover renting vehicles with or without driver, marking a shift from the erstwhile scheme which provided only for self-drive rentals. It mandates operators to provide drivers with a valid licence and welfare coverage. "It shall be the duty of every renter to ensure that the vehicle location and tracking device is functional at all times and immediately inform the licensee in case the vehicle location and tracking device is defective or non-functional," the draft said.