Centre Proposes Overhaul of Rent-a-Cab Rules, Cuts Minimum Fleet Size to Five Cars
The Ministry of Road Transport and Highways proposed a comprehensive overhaul of India's car rental regulations, reducing the minimum fleet requirement from 50 vehicles to just five cars. Under the draft Rent-a-Cab Scheme 2026, smaller entrepreneurs, local rental companies, and start-ups will be eligible to obtain operating licenses starting next January, according to The Times of India. The draft rules replace the 1989 regulatory framework, marking the first comprehensive reform of the commercial car rental sector in 37 years. Operators will need at least five vehicles overall, maintaining a minimum of two cars stationed at each operating location, while eliminating the requirement for branches in five tourist cities.
The proposed framework explicitly brings both self-drive car rentals and chauffeur-driven rental services under unified regulatory oversight to expand consumer choice. Operators will be able to secure a single electronic license valid across an entire state or Union territory for a uniform fee of 25,000 rupees, replacing separate main and branch permits. Authorized operating locations under the scheme may encompass airports, railway stations, and bus terminals, according to The Times of India. The ministry established a 60-day processing timeline for granting and renewing licenses, which will remain valid for five years.
To accelerate fleet modifications, requests to add or remove vehicles and operating sites will receive automatic clearance if regulators do not finalize reviews within 30 days, according to The Times of India. Integration with electronic Vahan registers and automatic vehicle data retrieval will reduce administrative paperwork for licensed businesses. The draft introduces a nine-year age limit for rental vehicles and mandates valid registration, fitness, and pollution certificates alongside full motor vehicle tax payments. Additionally, vehicles must carry comprehensive insurance covering all occupants according to passenger capacity, remain free of specified pending traffic challans and unpaid tolls, and have no record in the NCRB police crime database.
Passenger safety measures feature prominently in the draft regulations, requiring all rental vehicles to be equipped with GPS tracking devices, first-aid kits, and child restraint systems. For chauffeur-driven rentals, the rules mandate police verification of drivers supplied by operators. Operators must also maintain round-the-clock customer care facilities, resolving website complaints within 24 hours and investigating driver-related complaints within seven days. The ministry invited stakeholder comments on the draft scheme until December 5, aiming to boost competition and widen participation across India's mobility sector. Transport ministry officials expect the simplified entry criteria to stimulate broader regional competition and expand organized mobility options across smaller cities. In 2021, the ministry amended the Rent-a-Cab Scheme to cover battery-operated taxis and vehicles running on ethanol or methanol.