MoRTH draft cuts minimum car rental fleet from 50 to 5

Fleet size drops from 50 to 5

The Ministry of Road Transport and Highways has put out a draft Rent a Cab Scheme 2026 that would replace the 37 year old 1989 scheme governing car rental licences in India. The biggest change is the minimum fleet size an operator needs to hold a licence. Under the 1989 rules it was 50 vehicles, with half of them air conditioned. The draft cuts that to just 5 vehicles in total, with at least 2 stationed at each place of operation where the operator wants to work.

MoRTH issued the draft under Section 75 of the Motor Vehicles Act, 1988. It is open for comments from the public and the industry until December 5, 2026. The ministry's stated reasoning is that a lower entry bar lets small operators, local firms and startups into a business that until now needed a fleet large enough to keep most big players and few others in the market.

What changes for operators and renters

The draft folds self-drive rentals and chauffeur-driven rentals into one framework. The 1989 scheme barely covered chauffeur-driven cars, so this is new ground for that segment. Licensing moves to an online system, with a flat application fee of ₹25,000 whatever the fleet size or number of cities the operator runs in, against a patchwork of a ₹5,000 base fee plus ₹1,000 per branch office under the old rules. A licence under the draft runs for 5 years and applications are meant to be cleared in 60 days. If the ministry does not decide on a request to add or drop a vehicle or a location within 30 days, the draft treats it as approved by default.

Vehicles also face an age cap for the first time in this scheme. Any car that has completed 9 years from its first registration cannot be used under a rent a cab licence once the draft takes effect. Operators will have to pull such cars from their rental fleet or register them elsewhere.

On the safety side, the draft asks operators to fit vehicles with location tracking devices, carry first aid kits and offer child restraint systems. Drivers need a valid licence, cleared police verification of character and antecedents, no pending traffic challans and coverage under the Code on Social Security, 2020. Operators must run 24 hour customer support and close any grievance filed on their website within 24 hours, and carry insurance that covers the renter, the driver and other occupants.

What it means for buyers of rental services

For an Indian traveller or a company booking a self-drive or chauffeur-driven car, this draft is still a proposal, not law. Nothing changes at the counter yet. Once finalised, the lower fleet threshold should bring more local operators into tier 2 and tier 3 cities where the big self-drive chains rarely go, since a company no longer has to buy 50 cars to get licensed there. The 9 year age cutoff should also mean fewer very old cars turning up as rentals. Anyone who wants to respond to the draft, as an operator, a driver or a consumer, can send comments to the ministry before the December 5 deadline.

Sources

• Centre plans major overhaul of rent a cab rules. Proposes lower entry barriers
• Centre proposes five-car minimum for rental fleets in draft Rent-a-Cab Scheme