The taxi business in India has been forecasted to grow at a CAGR of 13.7% during the 2017-2022 period. This means it’ll continue to grow just as aggressively, as it has in the last couple of years.
So, if you’re venturing into this business arena, you’ve made a promising decision. However, there are various things you need to know before you get started. Let’s help you with our guide.
- If you are going for partnership business, get a registered partnership agreement prepared. This shall contain detailed clauses related to the sharing of profit, loss, liability, etc. of the partners. You may make an application under section 58 of the Indian Partnership Act to register your partnership with the Registrar of Companies.
- If you want to have a Limited Liability Partnership type of business, then get it registered under Registrar of Companies. The process of incorporation is entirely online, meaning you’ll be able to do it conveniently.
- To start a proper company business, go through full registration and incorporation. Your company will need a Memorandum of Association and Articles of Association, which will be filed with the Registrar.
Type of Business
There are two types of taxi businesses you can choose from- Traditional and Radio Taxis.
- Traditional taxi business includes:
- Individual taxi
- Organizations that own a large fleet of taxis and run their business (for example- fast track call taxis, Meru cabs, etc.) However, such taxis are less preferred by people nowadays because of the ease of booking radio taxis.
- Radio taxis are booked online and are installed with a GPS tracking system. In this, drivers of the taxis are also owners of the car. They receive consideration directly and pay a percentage of the same to the company which coordinates and schedules the rides. The best examples of this are Ola and Uber, which are household names now.
Registration and Obtaining Permits
Filing and obtaining permits from various authorities will be a tough task during the initial phase of setting up your business. So, have a look at this step-by-step guide as this might simplify things for you a little-
Step 1: You first need to purchase cars which are suitable for being used as taxis and are economically affordable. You can compare mileage, fuel efficiency, etc. of different vehicles before you zero down on any car.
Step 2: Within seven days of purchasing the vehicle, you have to register the same with the District Transport Office/ Regional Transport Office. This is a mandatory requirement as per Section 39 of Motor Vehicles Act, 1988. The authority will provide you with the registration certificate. If you drive an unregistered taxi, then you will attract a penalty of Rs. 2000/-. However, the application forms, the portal, and a few requirements may differ from state to state.
Step 3: Once the taxis are registered, you need to get them insured. The Motor Vehicles Act, 1988, makes it mandatory for every vehicle to have a third-party liability policy. You can obtain insurance cover for your taxi/ taxis by filling in the application forms as provided by the insurance company. You will also have to comply with various mandatory procedures.
The commercial vehicle insurance will prove to be of great help as it will cover you for any damage or loss related to your taxis. These days it is easy to get vehicle insurance online as reputable insurers like tataaig.com offer policies online. They also offer several add-on benefits like roadside-assistance, engine secure, no claim bonus, etc. that can further reduce your financial worries.
State 4: You will need a special permit from the State Transport Office/ Regional Transport Office for ferrying people. For this, you’ll have to submit the related documents. Apart from this, you’ll also need a few more permits such as-
Fitness Test Permit from An Authorized Testing Station
This will establish that your taxis are fit to be driven around. They’ll also paint or affix the name and address of the owner of the vehicle.
Contract of Carriage of Passengers
You’ll have to make an application taking into consideration the type and capacity of your taxi and the area in which it’ll operate. The RTO will give you the necessary permit for the same.
All India Tourist Permit
If your taxis are to ply from state to state, you’ll need an ‘All India Tourist Permit.’ The same will be mentioned on the number plate of the taxi too.
Drivers and their license
You’ll also have to make sure that the drivers (if you hire any), meet all the requirements for driving a commercial vehicle.
Insure Your Taxis the Best Way
Your taxi/taxis may be a source of livelihood for you and your family members. So, accidental damage or theft to this may result in substantial financial losses for you. Therefore, to cover the risk, it is imperative that you have commercial vehicle insurance.
Commercial vehicle insurance will cover you for losses arising due to damage or theft, or to meet the cost of third-party liability related to your taxis. This will keep you free of worries and will enable you to spend your money on expanding your business instead of meeting damage-related expenses.
So, get your taxi/taxis fully insured and make your business grow over months and years.
Drive your way to success.