From 50 cars to 5: How the new Rent-A-Cab scheme could change your cab options
In a transformative policy revision aimed at dismantling high entry barriers for small mobility entrepreneurs, the Ministry of Road Transport and Highways (MoRTH) has notified draft amendments to the statutory Rent-a-Cab Scheme, slashing the mandatory minimum fleet requirement from 50 motor vehicles to just 5.
Key Highlights of the Proposed Rent-a-Cab Scheme 2026
Under the existing 1989 Rent-a-Cab regulations, individuals or tour operators seeking a commercial self-drive or cab rental permit were obligated to maintain a massive capital-intensive fleet of at least 50 commercial cars, accompanied by physical branch offices across multiple regional transport offices (RTOs). This restrictive legacy framework largely shut out local operators and small-scale entrepreneurs, driving thousands into unorganized gray-market rentals.
| Regulatory Parameter | Legacy Norms (1989 Rules) | Draft 2026 Proposed Norms |
|---|---|---|
| Minimum Fleet Size | 50 commercial motorcabs | 5 motorcabs (10x lower capital requirement) |
| Licensing Jurisdiction | Multi-office RTO clearances | Single-State Digital Permit valid statewide |
| Application Process | Physical counter submissions | 100% Faceless Online via Parivahan Sewa |
| Safety & Telematics | Optional manual records | Mandatory AIS-140 GPS & SOS Buttons |
What This Means for Indian Motorists and Tourists
For consumers, vacationers, and road trip enthusiasts, the democratization of the car rental industry is expected to unlock significant benefits:
- Lower Rental Rates: Increased competition between certified local operators and big tech aggregators will drive down per-day self-drive tariffs, especially in tier-2 and tier-3 tourist hubs.
- Enhanced Passenger Safety: All 5+ vehicle fleets will be connected to the national VAHAN and SARATHI telematics framework, ensuring certified vehicle fitness, active third-party insurance, and panic button compliance.
- Formal Local Employment: Small travel agencies across hill states, pilgrimage circuits, and coastal corridors can legally market self-drive cars without proxy permits or risk of RTO impoundment.
Next Steps for Prospective Operators
Once the 30-day stakeholder feedback window closes and the final notification is published in the Gazette of India, applications for the revised 5-vehicle permit will be routed directly through the unified Parivahan Sewa Portal under State Transport Authority jurisdictions.