Two Wheeler Rental Business in India

In this post I will outline requirements to start Two Wheeler Rental Business in India. This is a part of series of posts related to investing in vehicle rental business. I have made a post on investing in car rental business and another post about returns and review on Drivezy 2 wheeler attachment. Do check these out for a glimpse of how things work and environment with self drive vehicle rental companies.

bike rental business

The doors to two wheeler rental business were formally opened with Government of India’s RENT A MOTOR CYCLE SCHEME, 1997 – to regulate two wheeler rental business in India. By two wheeler rental I refer to model where a customer drives the bike themselves for own use. These vehicles have black number plate with yellow letters.

How to Start Two Wheeler Rental Business in India

First thing, you would need license to run motorcycle rental business from respective state transport authority. Conditions to get license are set forth in Rent a Motor Cycle Scheme, 1997. These conditions are stated below.

  1. Applicant should have at least 5 motor cycles with required permits and comprehensive insurance

  2. Applicant has at least one telephone number accessible 24 hours

  3. Applicant has required facility for parking, repair and maintenance

  4. Applicant has good moral character, knowledge of passenger transportation business

  5. Financial resource to maintain and manage the vehicle

The first and second points are objective and have clear measurement criteria. Rest of the points, particularly fourth and fifth have no strict criteria listed out.

Validity Period of License

The license obtained to run two wheeler rental business is valid for 5 years. A license that is renewed on expiry gets validity extended by 5 years, from the date of renewal.

Operational Guidelines to be Followed

The persons who runs the bike rental business should adhere to below general guidelines. These guidelines are as set out in Rent a Motor Scheme 1997.

  1. Maintain register/record with booking details captured at each individual bike level in the formats specified:
    – Form 3 of Motor Cycle Scheme, 1997
    – When hired by foreign national, Form 4 of Motor Cycle Scheme, 1997

  2. Should not shift primary business location mentioned at time of acquiring license without the prior approval from licensing authority.

  3. Keep the premises and motor cycles open for inspection by authorities.

  4. Periodically submit any information as requested by licensing authorities.

  5. Have the license displayed at main and branch office locations.

  6. Maintain a complaint register in main office and all branch offices. Copy of any complaint registered should be forwarded to licensing authorities within 3 days.

  7. Maintain a suggestion box at main office and all branch offices. Received suggestions should be periodically forwarded once a month to licensing authority.

Cancellation of License to run Motor Cycle Rental Business:

Following are some potential scenarios that may lead to cancellation or suspension of license by the authorities.

  1. Failing to comply with operational guidelines stipulated (listed above)

  2. Failing to maintain two wheeler per guidelines and required formalities

  3. Employees misbehaving with customers

  4. Complaint by persons hiring vehicle proven without doubt

Above are cases when license could get cancelled by authorities. On the other hand a person running two wheeler rental business may also surrender his license on his own if he chooses to exit two wheeler rental business for any reason.

Starting your Own Two Wheeler Rental Business Vs Listing on Established Platforms:

Above listed are the bare minimum criteria you need to meet just to satisfy the legal requirements to start rental business with bikes. But running them profitable takes lot more. You would need GPS / tracking devices both for billing purpose and protect theft of your vehicles, support staff, booking facilitation platform etc. Last couple of years saw birth of quite some bike rental startups in India (Drivezy, VOGO, Bounce)

Bike rental start ups in India are technologically well equipped, in terms of having online platforms / apps to facilitate bookings, automated tracking of vehicle where abouts, support staff, a large fleet of vehicles. While some platforms own the fleet many start ups have created a market place model where one can list two wheeler.

Considering statutory requirements and competition from bike rental startups equipped with better tech, it would be prudent to join hands with them rather than compete. Unless other ways you are from say a tier 3 small town where the bike rental startups don’t have a foot print, listing vehicle on established platform is a hassle free way to bet on bike rental business.

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