The Ministry of Road Transport has presented a draft amendment to the Rent-a-Cab Scheme (2026), which could simplify entry into and expansion of the business in car rental with and without drivers. According to the proposal, the minimum fleet requirement will be reduced from the current 50 vehicles to just five.
This project represents the first comprehensive update to the framework established in 1989, after 37 years. Previously, limited amendments were made in 2021, expanding the scheme's scope to include electric vehicles and vehicles running on methanol and ethanol, which are exempt from permit requirements.
Reducing the minimum fleet size to five cars—provided there are at least two vehicles at each service point—is likely to stimulate the entry of small entrepreneurs, local rental companies, and startups into the market. Furthermore, it may help existing operators expand their operations in new locations without maintaining a large fleet.
The proposed scheme, which the ministry plans to implement next year, also establishes stricter requirements for safety, insurance, and operational activities for companies renting out vehicles. Concurrently, it proposes introducing online licensing, temporary permits, and an official mechanism for handling complaints.
It is proposed to fix the licensing fee at 25,000 rupees, regardless of the fleet size or number of job positions. The new regulation also introduces a nine-year age limit for vehicles. Possession of valid registration, technical, and environmental certificates, paid vehicle tax, and comprehensive insurance covering the renter, driver, and other passengers up to the vehicle's capacity is required. Vehicles must also be free from specified unpaid fines and outstanding tolls, and not listed in the National Bureau of Crime Records police database.
Another significant change is that the scheme explicitly includes the rental of vehicles both with and without a driver. Previously, the 1989 framework was primarily oriented towards self-service. Now, operators are obliged to provide drivers with valid licenses, proof of identity and background, no outstanding fines, and social security in accordance with the Social Protection Code of 2020.
The project also provides for passenger safety requirements, including vehicle tracking devices, child restraint systems, first aid kits, and 24-hour customer support. Operators are obligated to resolve issues reported via the website within 24 hours, and investigations into driver complaints must be concluded within seven days.
According to the project, licensing will become digital. Applications and renewals will be submitted electronically, and authorities must review them within 60 days. The license validity period will be five years. Applications to add or remove job positions or vehicles will be considered approved if the authorities do not make a decision within 30 days.
The new structure also provides for differentiated penalties for violations, including monetary fines, suspension, or cancellation of licenses, which will be determined by state governments. The ministry invited interested parties to submit their comments on the project by December 5.
