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Updated On :
July 20, 2023

How To Start A Taxi Business In India?

July 20, 2023
How To Start A Taxi Business In India

The taxi business in India is becoming one of the lucrative and profitable businesses because nowadays everybody prefers to go with taxis as it shows the symbol of status. Also in the present climate, the fuel prices are going through the roof this also increases people to preference for taxes rather than their own vehicles. This increases the competition in the taxi industry as well but getting into this industry is one of the best ideas to put up your services at a low and reasonable price because it is a vendor-driven market and it does not have to invest much. 

So before starting a taxi business in India you should know about what factors influence the taxi business and how you can manage it.

Find the potential for taxi business 

The first and foremost thing you need to understand for starting your taxi business is there are many prospects to start a taxi business and you can earn more even if you have a lot of competitions. For this, you need to know whether people in your region are willing to have a taxi business or not or if it is yes then what are their needs for the same. 

How To Start A Taxi Business In India

For this at first, try to find out what your competitors are giving to your targeted customers and what you can give them new according to their willingness. Because studying your competitors can give you more knowledge about what is required in the market and how you can give better. Also, explore the market to find out what unique for extraordinary you can give to your clients for or their trust and how you can make your brand value this can be done with the help of planning keeping in view the demand of your targeted market. 


There are different types of taxi businesses depending upon the niche of customers you targeted. Firstly you need to find out which type of business you would like to do after you find the potential in the market. 

How To Start A Taxi Business In India

One is a traditional type and the other one is modern type. 

  • Traditional type: it includes two types 1 individual taxis which are run by an individual and 2 are organizational organizations taxis where an organization number of cars and taxis and they run them as taxis.  
  • Modern type: as the period of modernization now people do not prefer to have a traditional type of taxis but a modern taxis called radio taxis this type of taxi has GPS service system install in it and can be booked online even the route of a taxi is traceable do people feel more trustable and secured in this type does prefer it. 


How To Start A Taxi Business In India

Now after realizing which type of business you need to start as a taxi business from the current size of the market and their preferences. Develop a plan about your business how can you run it where you can run net how you can make customers attracted to your business. How many vehicles you will own, how many and which kind of drivers will be required, which vehicles you will own, how will you invest your finance and how will you manage it all, provide you brief and perfect knowledge through planning. And this planning I will help you to make a profit by making your brand value. 


How To Start A Taxi Business In India

After developing a plan think about which route you would like to choose and vary your tariff according to day and night also according to the different parts of regions and also provide some plants for customers within the regional limit. Also, make sure you have different options for your customers to pay so that you can make a flexible link between you and your customer between you and your company, and between you and your driver. 


Registration Process and Required Compliances 

To purchase, register, and obtain permits for vehicles and the business is one of the most important and difficult tasks for a business during its initial stage. All these legal formalities are to be done before starting the business itself so that you could not get any complications in starting the business. Here are some of the steps which will help you in registering your business without complications: 

  1. Firstly purchase the car or taxis for the business which are for the purpose of a taxi business and are economically affordable for it. 
  1. After purchasing the vehicle you need to get it registered under the district transport office or regional transport office related to your state and it is mandatory to register your vehicles in 7 days from its purchase under the motor vehicle act 1988. After this, the transport authority provides you a legal certificate or registration of your vehicle but if you run your vehicles without registration you will have to pay a penalty of 2,000 rupees. 
  1. The vehicles need to be registered so that when there is a third party issue or damage it can be useful. This insurance can be taken from any kind of insurance company by filling the application form and following the mandatory details. 
  1. After that check ok that all your taxis are being cleared with all the environmental issues that are guided by the state. 


How To Start A Taxi Business In India

The person who has a car or any vehicle needs to have a driving license to show its authorization. It’s up to him to use it. But if that vehicle is used for commercial purposes then a person needs to have a commercial driving license for it. That driving license is issued by the RTO regional transport office of a particular state and this license is mandatory for all the vehicle owner and the one who is driving it. 


  • Drivers must be at least 18 years of age. 
  • Drivers must be at least educated to class 8. 
  • Learning license is necessary for at least 6 months 
  • A driving test is necessary to assess whether he can drive. 
  • A medical fitness certificate of a driver is necessary. 
  • Application of LICENSE can be done on an offline basis 
  • Should have trained from government motor school. 

A taxi driver needs to submit a medical certificate about his medical and mental fitness. After analyzing all the factors above then only the license will be provided by the RTO office. 

Also, working hour of drivers are fixed that as an adult a person can work for not more than 8 hours a day or 48 hours a week it is also given under motor transport workers act 1961 but if the transportation distance is long-distance then a person needs to take permission from the proper authority who can grant permission for it but the permission cannot be granted for more than 10 hours a day or 54 hours a week. 

Documents required for the application of the Commercial Driving License 

  • Identity Proof 
  • Address Proof 
  • Multiple passport size photos 
  • Application fee 

Vehicle permit 

 Vehicles need to have a permit to use it as a taxi because not all vehicles can be used as taxis to transport goods or people. This permit of transportation is being obtained by RTO regional transport authority or state transport authority by submitting a form for a permit.it is mandatory for all vehicles to register it before using it or driving it. 

In this taxi owner can choose to get a permit for all India transportation which can be obtained by giving summiting of form to All India Tourist Permit(AITP) along with the prescribed legal fees. 

Contract of carriage passenger 

If a person carries the passenger he needs to be registered under a contract of carriage passenger where a contract is made for the Number of persons in each to be carried for a particular sum to a particular place. Here you need to fill an application for a particular type of vehicle and the number of sittings in that vehicle also the area in which that particular vehicle is going to be operated with some more details likewise this is to be done under motor vehicle act 1988 section 73 

Fitness certificate 

Every vehicle needs to be maintained regularly on a periodic basis so as to keep it and passengers safe. Under the motor vehicle act 1988 section 84, every vehicle needs to have a fitness certificate from Thora in testing stations. Every vehicle needs to be run at a particular speed which varies from state to state. Usually, this speed is from 50 to 65 kilometers per hour. Also in this section, it is compulsory to have printed the name and the address of the operator of the taxi on it. 

All India Tourist Permit 

If if you need to go from state to state you need to have an all India tourist permit for your taxi. It can be done by filling in an application for it with particular fees even the number plate of all India permit should have written all India permit taxi on it. It is also mentioned in the act that these vehicles cannot be used for local purposes that is you can not carry any goods or passengers local with this Taxi. 


Drivers are one of the main components or factors of taxi companies. You need to take care of each and everything why hiring drivers for your taxi whether they are part time or full time drivers you need to check their backgrounds carefully before selecting them. There are some points to kept in mind which are as follows: 

How To Start A Taxi Business In India

1. Background check 

The first and the foremost thing you need to do is to check the background of drivers you are going to select, check their previous job records, their family background, their habits, and personal records. Try to find out whether the person is reliable and honest or not. 

2. Interview  

In an interview try to check their driving skills, their sincerity, their politeness because they need to deal with customers every single second even if you can go with the driving test of the candidate before selecting him. 

3. Company ethics 

After selecting a candidate you need to abide by his or her company rules, regulations, codes, and conducts that are to be maintained so as to increase the brand value of the company with a reliable transport provider. 

4. Dress code 

One of the most important ways to increase your brand value and to become unique on your own is to have a dress code of your drivers that will help you to recognize yourself and this will maintain the ethics of the company as well. Show arrange a well-designed and colored uniform for your drivers. 

5. Operating time 

They need to have a particular timetable for your drivers but that timetable should be flexible enough to manage during emergencies. A driver can make judicious schedule changes in emergencies for this you can even give some kind of additional remuneration for the one who works in the tough times like peak time or at night. 

6. Rules 

A driver should be provided with the rules and regulations that are to be followed during his service like being polite to the customers no drinking during driving no smoking, no overspeeding, no extra money from customers, no breaking of traffic rules, etc. tell your driver that all these rules are compulsory to be followed or he will be fired immediately if you did not follow any of the rules. 

Guides For Growing Your Business

Taxation norms 

After implementation of GST goods and service tax, it is being compulsory for a taxi driver owner to give 5% GST for services provided to the passenger, that is he needs to give 5% GST for the fare he is taking from the passengers. But a meter taxis will not be liable for the same. 

Environmental regulations 

As a taxi driver or the owner of the taxi one should know about each and every rules and regulation that are being implemented by the state government for environmental protection and they need to follow them if anybody finds them without following them and they are charged with penalties. Because it will be a legal dilemma if they don’t follow it. 


Every business required some of the other tools and equipment for running the business. In the same way taxi business also required some of the tools the main tool of it is vehicles that you need to run as Taxis, the other requirement  is of drivers who can run the taxis., Also required office space for running your business with that you need to have a space for parking your vehicles. You also need to have software to manage the bookings as well as managing all the route tracking of drivers with the pay they get. You need to hire a receptionist for managing administration work. 


You may be ready to launch your own taxi business with a lot of creative ideas. But for all this, you need to have proper finance to make your organization grow. Even it is suggested that keep your finances in such a way that your ¼ of finance is always safe. Sometimes you have all your finance on your own but sometimes you need to rely upon others for financing your business as a creditor or a partner. In such cases, you can rely on multiple financing options available in your place. 

Some of them include: 

  • Personal Savings 
  • Applying for loans from banks, financial institutions, or even from your family or friends. 
  • Investors 
  • Microloans 


One of the main activities of the business is its promotional activities. If you set up your business but you did not promote it to anybody no one will know about it and all your time and investment will be wasted. 

The advertisement part entirely depends on the budget that you may earmark, With that your location work on There are some promotional methods that can be adopted with minimum budgets: 

  • Advertising in newspapers or radios: 

This is one of the oldest and reliable methods of promoting your business whenever it is new because many people read newspapers on a daily basis and it will increase your sales if you promote your business on newspapers or on radios. 

  • Word of mouth publicity: 

Mainly every business is promoted by the persons who have taken your services in the same way if a person likes your taxi services and likes your fear charges then he or she will promote your services, choose the other required candidates and will help you to build brand value. 

  • Social media marketing 

Today’s era is all about the internet . Every single person on one or more social media does to promote your business on social media is one of the best ways to get your targeted audience by your side. 

You can choose either free or sponsored advertising on social media such as Facebook, LinkedIn, Instagram, YouTube, and others depending on the impact and the coverage sought. 

  • Digital media marketing 

One does a lot to be there on the first 10 searches of the search engine thus Advertising (free or paid) on search engines, marketing campaigns conducted via the internet, emails, and mobile devices can also reap rich rewards from you. 

  • Select locations 

try to find out your target customers and where you can get these targeted customers so as to advertise your business according to it. Choose a selected locations 

For Advertising your business of Taxis where you can get more and more customers such as airports, bus & railway stations, and shopping complexes could also yield considerable visibility for your company. 

  • Promotions 

You can even encourage customers to get your services through different rewards like 

You could start loyalty based rewards, encouragement to avail repeat trips, providing discount coupons or e-Coupons, lucky dips and certain other promotional schemes could encourage the existing customers to prefer your services over others. This will not only help you to gain the customer but also will help you to maintain your brand value and bring your image up. 

  • Business ethics 

Most important advertising means that will show you in a better light is the consistent and pleasant customer experience while using your services; the various experiences such as spotting the taxi top lights/logo, easy booking, timely ride, competitive rates, and pleasant travel experience, and polite/decent driver behavior speak a lot more about your company than the other forms of advertisements. 


How To Start A Taxi Business In India

The taxi business is an essential part of a country’s economy. As a visitor to a country for the first time, it does not matter if you came by air, road or sea, there is a high chance that the first person you will encounter in any new city is a taxi driver, whom you need to hire to take you to your hotel or your chosen destination. The carriage and attitude of the taxi driver instantly make somewhat of a first impression of the attitude of the people of that place in your mind. 

The economy of a country, in turn, impacts the taxi business by fares, good roads, and fuel prices. Like if the economy is increasing the TAXI fare also increases and if the economy decreases the taxi fare also decreases.  

Due to the unregulated market and the fierce competition for lucrative routes and passengers taxi operators team up to form national and local associations. These associations soon begin showing mafia-like tactics, including hiring hitmen and instigating gang warfare. 


The taxi business continues to progress and establish its bankability in the market, there remains no argument in venturing into this highly lucrative industry. Nonetheless, not every taxi business can survive the intense competition. Here are five do’s and don’ts that will guide your company to success. 


1.Do analyze your competitors.  

Try to examine the taxi services provider in your region and what kind of services they are providing and also try to understand the customer’s and their requirements whether they are fulfilling it or not then provide your services according to the niche of the customers and also engage some kind of uniqueness into it to be different from your competitors. These factors will define the vehicles to be added to your fleet, target audience, and pricing strategy. 

2. Do comply with all lawful guidelines. 

Taking lawful action is one of the best ways to start your business so find out all the necessary legal requirements for your business in the starting itself so as to become a lawful organization. This begins right from obtaining your business permit and license to necessary vehicle documents such as insurance, vehicle registration, permit, and more. 

3. Do consider your audience before investing in your fleet. 

After deciding what type of business you want to start from the above type the name considers your audience niche and also your targeted audience. Like if your target audience exclusively includes corporate employees, they may seek luxury and add-ons like wifi.  But if your targeted audience includes housewives they will require cheap, fast, and comfortable rides rather than luxury add ons. So by considering these fleets try to take up your business. 

4. Do set guidelines for the commission and revenue policy for individual drivers and partners. 

 If your taxi business has adopted the partnership model, it is highly recommended to elucidate the earning policies. This can be a game-changer in streamlining your processes and avoiding any confusion. 

5. Do watch out for emerging trends in the taxi business industry. 

As the world is a technological world, Every now and then, innovative technology introduces new features and the market opens up new opportunities. To continue growing, make sure your taxi software and application incorporates such enhancements. 


1.Don’t overlook your local market. 

 Most taxi businesses understand the industry but fall short of analysing their locality. You need to find out your niche and where you can make it successful.so think the idea out of the box rather than going with all because there is not one idea for it .  

2. Don’t stop re-evaluating your business.  

If your business is running well don’t think that you will go like this only and earn more because every now and then changes are being brought up by this technological world thus working on one plan will not work without re-evaluating it.so analysis your business expenditure and area where taxi generate more revenue and try to uncover hidden opportunities and improve drastically 

3. Don’t ignore customer grievances.  

Always ask your customer about the feedback of your taxi services through any kind of mobile app so that you can get the true image of your services and you can improve it you also will able to find what your customers needed and what you are providing to them does you can improve your services through it and worked on the niche of your customers 

4. Don’t neglect driver monitoring.  

You also need to monitor your drivers because it is crucial that they need to follow all the safety standards with all your company standards and rules so that they can be liked by their customers with that for monitoring your drivers ask a feedback about the drivers from the customer and ask them to give drivers Bee rating on which basis you can identify their behaviour with customers 

5. Don’t expect results without marketing your business.  

The industry is highly competitive and unless your taxi business doesn’t have a strong presence and brand identity, it will become difficult for your customers to trust your services. Spread the word, improve customer engagement and grow your business 


  • Do not get into a price war. It would not be profitable and it would take a lot of time to break even. 
  • Do not expect very high revenue within the first year. If you are able to break even within the first year, it means you are on a fast growing track. 
  • If you are able to get fifty loyal customers by the end of the first year, you are doing well in terms of customer base. 
  • If you are able to concentrate on tier I and tier II areas, you would be able to see a three digit growth rate. 
  • Your growth is highly connected to the way you advertise your business. 
  • Online booking services and mobile apps would increase the flexibility of the business and attract more customers. 


As a taxi business is one of the best businesses nowadays because everyone due to the increase in the fuel rates now and then preferring to have a potential taxi service. So by analyzing your market with the niche of your customers you can start up a taxi business but you need to look up the proper steps if you want to enter the taxi market like firstly plan the business then select the financial areas also select the traffic and route plans then do all the legal formalities required by taking up all the LICENSE and registration for starting up a taxi business with ease.

It is also important to have the best driving team to provide the best services thus get your team ready also make yourself ready with all the latest tools and equipment. Now the best and the most important thing is to make your business promoted in such a way that you can generate a large number of customers thus making sure to invest wisely in advertising your business. These all tips will help you to lead the taxi services industry with a benchmark. 

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