India's Centre plans a significant revamp of its rent-a-cab regulations, with the Ministry of Road Transport and Highways releasing the draft Rent-A-Cab Scheme, 2026. The proposed changes aim to replace the existing framework from 1989, primarily by reducing the minimum fleet requirement for operators from 50 vehicles to just five.
This move is expected to dramatically lower entry barriers for smaller businesses, including self-drive car rental companies, and foster greater competition within the sector. The draft scheme also proposes a flat license application fee of ₹25,000, irrespective of the number of vehicles or operating locations, a substantial increase from the current ₹5,000 plus additional branch fees.
Key Changes in the Proposed Scheme
- Reduced Fleet Size: Operators will need a minimum of five vehicles overall, with at least two motor cabs at each approved operational location, down from the current 50-vehicle minimum.
- Broader Scope: The new scheme explicitly includes both self-drive and chauffeur-driven rental services under its regulatory umbrella, unlike the previous framework which focused primarily on self-drive.
- Vehicle Age Limit: Vehicles completing nine years from their first registration will no longer be eligible under the proposed scheme.
- License Validity: Licenses will be valid for a period of five years.
Enhanced Consumer Safety and Operational Mandates
The draft also introduces several stringent requirements aimed at enhancing consumer safety and operational standards:
- Comprehensive Insurance: Operators must maintain comprehensive insurance covering renters, drivers, and other occupants.
- Customer Support: Provision for 24-hour customer care facilities and a mandate to resolve grievances received through their websites within 24 hours.
- Vehicle Safety Features: Rental vehicles will need to be equipped with vehicle location tracking devices, first-aid kits, and provisions for child restraint systems.
- Breakdown Services: Operators will be required to arrange vehicle repair and towing services in case of breakdowns.
- Driver Verification: For chauffeur-driven services, police verification of drivers is mandated, along with valid driving licenses and compliance with social security provisions.
While these changes are set to expand participation and offer consumers more choices, the increased application fee, vehicle-age restrictions, and additional safety requirements could lead to higher compliance costs for existing operators. Licensing authorities will also gain powers to impose penalties, suspend, or revoke licenses for violations.
The Ministry has invited comments and suggestions from all stakeholders on the draft Rent-A-Cab Scheme, 2026, until December 5, 2026, before finalizing the regulations.