Centre plans major overhaul of rent-a-cab rules; proposes lower entry barriers
Operators will need to maintain comprehensive insurance covering renters, drivers and other occupants, provide 24-hour customer care facilities and resolve grievances received through their websites within 24 hours.
- Nov 12, 2026,
- Updated Nov 12, 2026 1:14 PM IST
The Centre has proposed a major overhaul of India's rent-a-cab regulations, seeking to reduce the minimum fleet requirement for operators from 50 vehicles to five, in a move that could lower entry barriers for smaller businesses and self-drive car rental companies.
The Ministry of Road Transport and Highways has released the draft Rent-A-Cab Scheme, 2026, proposing to replace the existing framework introduced in 1989. The draft, issued under Section 75 of the Motor Vehicles Act, 1988, also proposes a licence application fee of ₹25,000, irrespective of the number of vehicles or operating locations.
Under the existing rules, operators are required to maintain a fleet of at least 50 motor cabs, of which at least 50% must be air-conditioned. They are also required to have branch or sub-licensee offices in at least five cities of tourist importance, with facilities for housing, maintenance and repair of vehicles. The existing application fee is ₹5,000, with an additional fee of ₹1,000 for each branch office outside the jurisdiction of the licensing authority.
The proposed framework seeks to make licensing requirements more flexible. Operators will need to maintain at least five vehicles in total, with a minimum of two motor cabs at each approved place of operation. The licence will be valid for five years, while vehicles completing nine years from their first registration will not be eligible under the proposed scheme.
The draft also seeks to bring both self-drive car rentals and chauffeur-driven rental services explicitly within its regulatory framework. Under the existing scheme, the primary focus is on renting motor cabs to individuals intending to drive them for their own use.
The proposed changes could significantly expand participation in India's car rental market by allowing smaller operators and startups to enter the business with lower initial fleet investments. The move could also encourage competition, expand rental services beyond major tourist destinations and offer consumers more choices. However, the higher application fee, vehicle-age restrictions and additional safety requirements could increase compliance costs for existing operators.
The government has also proposed several consumer-safety and operational requirements. Operators will need to maintain comprehensive insurance covering renters, drivers and other occupants, provide 24-hour customer care facilities and resolve grievances received through their websites within 24 hours.
Rental vehicles will need to be equipped with vehicle location tracking devices, first-aid kits and provisions for child restraint systems. Operators will also be required to arrange vehicle repair and towing services in case of breakdowns.
The proposed rules mandate police verification of drivers provided by rental operators, along with valid driving licences and compliance with applicable social security provisions.
Licensing authorities will be empowered to impose penalties and suspend licences for violations. Continued non-compliance could lead to licence revocation.
The ministry has invited comments and suggestions from stakeholders until December 5, 2026.
The Centre has proposed a major overhaul of India's rent-a-cab regulations, seeking to reduce the minimum fleet requirement for operators from 50 vehicles to five, in a move that could lower entry barriers for smaller businesses and self-drive car rental companies.
The Ministry of Road Transport and Highways has released the draft Rent-A-Cab Scheme, 2026, proposing to replace the existing framework introduced in 1989. The draft, issued under Section 75 of the Motor Vehicles Act, 1988, also proposes a licence application fee of ₹25,000, irrespective of the number of vehicles or operating locations.
Under the existing rules, operators are required to maintain a fleet of at least 50 motor cabs, of which at least 50% must be air-conditioned. They are also required to have branch or sub-licensee offices in at least five cities of tourist importance, with facilities for housing, maintenance and repair of vehicles. The existing application fee is ₹5,000, with an additional fee of ₹1,000 for each branch office outside the jurisdiction of the licensing authority.
The proposed framework seeks to make licensing requirements more flexible. Operators will need to maintain at least five vehicles in total, with a minimum of two motor cabs at each approved place of operation. The licence will be valid for five years, while vehicles completing nine years from their first registration will not be eligible under the proposed scheme.
The draft also seeks to bring both self-drive car rentals and chauffeur-driven rental services explicitly within its regulatory framework. Under the existing scheme, the primary focus is on renting motor cabs to individuals intending to drive them for their own use.
The proposed changes could significantly expand participation in India's car rental market by allowing smaller operators and startups to enter the business with lower initial fleet investments. The move could also encourage competition, expand rental services beyond major tourist destinations and offer consumers more choices. However, the higher application fee, vehicle-age restrictions and additional safety requirements could increase compliance costs for existing operators.
The government has also proposed several consumer-safety and operational requirements. Operators will need to maintain comprehensive insurance covering renters, drivers and other occupants, provide 24-hour customer care facilities and resolve grievances received through their websites within 24 hours.
Rental vehicles will need to be equipped with vehicle location tracking devices, first-aid kits and provisions for child restraint systems. Operators will also be required to arrange vehicle repair and towing services in case of breakdowns.
The proposed rules mandate police verification of drivers provided by rental operators, along with valid driving licences and compliance with applicable social security provisions.
Licensing authorities will be empowered to impose penalties and suspend licences for violations. Continued non-compliance could lead to licence revocation.
The ministry has invited comments and suggestions from stakeholders until December 5, 2026.