Know All About How To Start A Taxi Business In India

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Want to know how to start a taxi business in India? All you have to do is read along and know all about starting this business.

The number of taxis has increased in the country and more and more people are making use of taxis than their personal vehicles. Therefore, the taxi business is one of the most booming business ideas in India.

So if you are looking to start your own venture then this is the right business for you. Once done properly, you can grow it and earn a lot of profit from it.

Interested to know more about it? We bring you a detailed write-up about everything you need to know about this venture and how must one go about it.

Having the Right Taxi Business Plan

Every business needs a good plan without which any business would not be able to flourish. The plan should not be just for the coming 1 month, 6 months, or a year but you should have a thorough knowledge of the coming 4-5 years of your business and where you want to go with your business. 

Similarly, it is crucial for you to have a good business plan and you can follow these steps for the same:

Establish the business plan

Understand the area and the region you would be working in. Know the vehicles you can own directly or hire from others and the drivers you want to hire. Have a good and strong financial plan so that you have enough for the initial few years.

Establish tariffs and route plans

Make a tariff plan that is based on different locations, distances, day or night travelling. Set the regional limits within which you would run your taxi service.

Another important aspect of the planning is the mode of payment. With so many modes of payment available today, choose how you want to go about it.

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Plan for vehicle acquisition and driver hire

There are two ways to go about this business. You can either purchase your own vehicle or hire someone else’s and drive around that. Another way is you give your fleet of cars or a car to other drivers who you can hire.

These drivers can either be full-time or part-time.  Since this requires a big part of investment in the initial days, hence make sure your figure this out before your company is registered.

Establish the funding

Funding is one of the most crucial parts of your budding business. Once your initial capital requirement is planned, you must start to work on arranging for funds.

Go for a bank loan which would require documents of your business. If you are going ahead with a bank loan, make sure it takes care of all aspects like operation, infrastructure, insurance, marketing, legal and statutory aspects.

Acquire office space

The next step of this plan would be acquiring the office space which you can use as a point to coordinate and control the taxi services. The office premises need to have parking space for vehicles. You can get this space for rent or use one that already belongs to you.

Register the business

Registering the company is important that must be done with required regional or national authorities which can include the registrar of companies, taxation authorities, environmental & safety clearances, and labour authorities.

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Steps and Requirements for a Taxi Business

How to fund your startup costs?

There are several ways for one to go about funding and they are that you can either look for a loan from a bank or ask any family or friend to help you with the initial funding. 

Related: Our Favorite eCommerce Business Ideas for Indians

Types of Taxi Business

Traditional Taxi

Traditional taxis are individual taxis and organizations owning a number of cars and running a taxi business (Example: Meru cabs) 

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Radio Taxi

Radio taxis have GPS installed where taxis are booked online and one can easily trace the route of the taxi. Some of the examples are Uber, Ola, etc and they run on an application through which they get the bookings.

The Motor Vehicles Act in India governs the taxi business in our country. In the radio taxi, the drivers of the taxi usually own the vehicle and whatever amount they earn they pay some percentage to the company.

Registration & Obtaining Permits for Vehicles

Registration Process and Required Compliances

This is going to be a big task at the initial stage of setting up a business. 

Step 1: While buying cars for your business, make sure that the taxis are taxi-type and within your budget.

Step 2: After purchasing the vehicle, get it registered before the regional Transport Office / Districts Transport Office within 7 days from the date of the purchase which is a mandate for all under section 39 of the Motors Vehicles Act, 1988.

Here, the office would provide you, the owner, with the registration certificate. Remember, it is an offence to drive an unregistered vehicle with the penalty of INR 2000/-.

Step 3: In the third step, it’s time to get the insurance done for your taxi which is very important and useful in case of any harm or damage is caused to a third party by the taxi.

There are many insurance companies that can help you with the same and that comply with important procedures as stated by the insurance companies.

Step 4: Now, make sure that your vehicle has compiled all the environmental clearances as required by the state authorities. 

Vehicle Permits

It is important to know that not all cars can be used for the taxi business in India hence proper permits must be obtained to transport people from one place to another.

This permit can be obtained from the regional transport office or state transport office by submitting forms as required. 

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Contract of carriage of passengers

Now, you must work on an application with respect to contract carriage of passengers which states that the owner/ driver carries the passengers under a contract for a particular sum to a particular place.

The application must be filed in accordance with Section 73 of the Motor Vehicles Act, 1988 as per the seating capacity & type of the taxi, the area in which the taxi is going to run and other such details as prescribed by the State Authorities.

Fitness Certificate

In accordance with Section 84 of the Motor Vehicles Act, 1988, all vehicles must have and carry a fitness certificate from an Authorized Testing Station. As mandated under the provisions of the Motor Vehicles Act, all vehicles must be maintained properly.

Usually, the speed limit for taxis vary from state to state and is about 50 to 65 km/hr. The name and the address of the operator of the vehicle shall be painted or affixed on the taxi.

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All India Tourist Permit

If the taxi is to ply from state to state, then this permit is required for the said taxi. It can be obtained by making the necessary application before the Transport Authority after properly analyzing the same.

The number plate of the taxi granted should contain that the taxi has an All India Tourist Permit and it cannot be used for local purposes i.e. it cannot carry passengers locally.

Drivers, their Licenses & their Work Hours

All taxi drivers should have a commercial vehicle driving license which one can obtain from the Regional Transport Office of that particular state.

For the license, there are basic requirements that must be met. A medical certificate also needs to be submitted regarding his/ her physical and mental fitness. The license will be given by the Regional Transport Authority after going through all the above factors and consideration of the Application.

The work hours for a taxi driver shall be as provided under Motor Transport Workers Act, 1961. Section 13 of the Motor Transport Workers Act, 1961 provides that an adult motor transport worker shall not work for more than 8 hours per day or 48 hours in a week.

You can easily track your working hours using the time tracker register for taxis on Lio. If the taxi business involves driving long distances, etc., then the employer shall obtain permission from the prescribed authority.

With this permission, the driver may be allowed to work for an extended period but not more than 10 hours a day and 54 hours a week.

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Getting the Driving Team Ready

Hiring taxi drivers for your taxi business in India is a tricky job and needs you to be very vigilant. 

Background Checks

You need to go to lengths to know all the backgrounds of all the candidates you are interviewing for the job. Conduct a detailed check of the habits, previous work, personal records, and conduct in general. 

While interviewing the driver, check his patience, driving skills, sincerity, and politeness. Check all the necessary and valid documents and their validations time. Taking a thriving test would also be a great way to test their skills. 

Company Ethics

Make sure that they abide by all the company rules and regulations. Remember that if you hire a driver who does not represent the company well, this will directly impact your customer relations and then your company. Brand value and reputation is the most important aspect of the business.

Dress Code

A dress code will reflect the values of the company and oneness. This would also show uniformity and let us be honest, everyone looks more disciplined in a uniform. 

Operating Times

Make sure you make judicious schedule changes and provide balanced and flexibility to all drivers. You can plan additional remuneration for your drivers who drive during odd or hectic hours.

Rules

All drives must follow all the rules of the company and there should be no other way about it. Do not overlook incidents of drivers involved in drunken driving, over-speeding, rude behaviours, violating of traffic rules, etc.

Drivers are the face of the company therefore it is best that they understand to stay at the best of their behaviour at all times.

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Advertising the Business

Today, the growth of any business is dependent on advertising and marketing. Have a good budget to invest in it and get yourself some people who are good at advertising and social media marketing.

Choose platforms like Instagram, Facebook, YouTube, etc, and market your business to people. When it comes to digital marketing, for both paid and free advertising on search engines, you need to get someone who is good at campaigns, email marketing and is able to connect with all kinds of users and customers. 

Another great way of promoting your business would be by advertising it in selected locations like airports, buses, railway stations, shopping complexes, etc. To encourage customers to get your services you can give exclusive offers and loyalty-based rewards, discount coupons, etc. This would definitely help in kick-starting your business.

One of the most important tips for a good business advertisement is providing your customers with great service and having good business ethics. The consistent and pleasant customers will throw good light at your business.

This is only achievable with timely rides, easy bookings, clean and hygienic taxis, top lights and logos, easy money transactions, polite and decent behaviour, competitive rates, and many other similar things. 

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Also Read: Here’s how to Start a Car Wash Business in India

Frequently asked questions

How To Get a Loan For a Taxi Business?

Banks in India offer different loans and schemes for all those interested in starting their own taxi business. Ine must do thorough research and get in touch with an agent to al=know about all the specific details.

What is a Radio Taxi?

A radio taxi can be requested on call by specific phone numbers. They are either assigned on spot or hired and cannot be booked online.

How can Taxi Owners get an All India Permit?

An All India Permit can be acquired through the Transport Authority by applying with a legal fee. This is the All India Tourist Permit (AITP) which gives your vehicles the recognition of “Tourist Vehicle”.

They are mostly meant for tourists who are travelling inter-state and not the regular commuters. There should be proper registration of the vehicle and all the other certificates, just like any regular taxi.

How can one innovate in the taxi business?

You must have a good client base, and there are various ways that you can ensure that.

Consider offering discounts and extra coupons for regular clients. You may also offer discounts for clients who take fixed routes daily. Use the best car for the taxi business, that is the vehicles are in the best condition and are well maintained.

You can ensure better safety for vulnerable groups.

There should be steps to increase safety for women and other marginalized sections of society. You can hire female drivers for women to feel safer as a USP of your business.

Conclusion

So, it is clear that to start a taxi business in India one firstly needs to be clear on the business structure they want the business to run on, purchase the cars suitable for the business based on which acquire the license and permits.

If you are going to hire drivers, then ensure they have a valid driving license for driving taxis. It is also clear that it is the radio taxi business which is thriving and growing currently in the world and most important in our country. Hence, make a wise decision and start a taxi business in India of your own. I am sure that you if do thorough and detailed research of the business, you would end up excelling in it.

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About the author

Ashutosh Bhatt

Ashutosh joined Lio as the marketing manager and has played a significant role in our growth. A traveler at heart, you might just catch him on a flight to any exotic countries around the world when he isn't busy ranking websites.

10 comments

  • Thank you very much for this useful information. I have a few friends in this industry. I will certainly share this, and it will be helpful for them.

    • Hello Sharon,

      Thank you for all the love.

      The following documents are necessary for you to obtain a taxi permit: Submission of Form-CCPA,  Certificate of Registration (If the vehicle is registered one),  Insurance Document (If the vehicle is a registered one),  Proof of age, Address verification.

      Online applications can be submitted. Application forms can also be obtained at the respective RTO offices and must be completed and submitted with the required payments.
      The officials will begin processing your application after you present the completed forms and payment at one of the counters.
      Kindly research more and proceed accordingly.

  • I recently discovered that taxis are referred to as hacks. Please explain to me why that is the case.

    • Hello Sanskar,

      Thank you for asking such an interesting question.

      Before the invention of the motor vehicle, during the era of horse-drawn carriages, the term “hackney carriage” was used to refer to a cab. Short for hackney is hack!
      It may still be used in slang today.

By Ashutosh Bhatt