How to Start a Cab Business in India – Practical Guide
By: FastTrack
Last Updated: October 9, 2025
India’s cab and car rental market is booming, driven by growing urbanization, increasing travel needs, and the popularity of app-based taxi services. If you’ve been wondering how to start a cab business in India, this is the right place to step in. But before you dive in, make sure you’ve researched the demand in your city, checked competitors, and planned the routes or areas you’ll serve.Whether you want to build your own fleet, explore car hire franchise opportunities, or partner with a trusted car rental franchise, this guide will walk you through every step.
Table of Contents
Why Cab Business is a Smart Idea in India
Before we dive into the how to start a cab business process, let’s look at why this is a great investment right now:
Urban Growth: More people are relying on cabs for daily commutes, airport transfers, and outstation trips.
Flexible Market: You can start small with 2–3 cars and grow to a fleet of 50+.
Tech-Driven: App-based cab booking has made it easy to attract customers.
Multiple Revenue Streams: Local rides, corporate tie-ups, airport pickups, and outstation rentals.
Step-by-Step Guide on How to Start a Cab Business
1. Choose Your Business Model
There are 3 main approaches:
Business Model | Investment Needed | Effort Required | Profit Potential |
Independent Fleet (owning cars) | ₹50-90 lakhs for 5-10 cars | High (operations, bookings, driver management) | High but slower break-even |
Aggregator / Partner with Drivers | Low – mostly tech & operations | Medium (driver acquisition, marketing) | Moderate |
Cab Franchise Model | ₹10-15 lakhs (franchise fee + working capital) | Low to Medium (brand handles tech & bookings) | High, faster ROI |
Pro Tip: If you’re new, starting with a cab franchise is safer. Brands like FastTrack provide ready bookings, app support, driver training, and customer trust – saving you years of trial-and-error.
What is a Cab Franchise Model?
A cab franchise model allows you to run a taxi business under an established brand’s name and system, instead of building everything from scratch. You pay a franchise fee and get access to their brand reputation, booking platform, and operational support.
There are two common types of cab franchise models in India:
i. FOFO Model (Franchise-Owned, Franchise-Operated)
Ownership: You invest in vehicles, infrastructure, and hire drivers.
Operations: You handle the day-to-day operations — bookings, driver management, vehicle maintenance — using the franchisor’s brand and technology.
Revenue: You keep most of the profit but pay a royalty or commission to the franchisor.
Best for: Entrepreneurs who want full control of operations and are willing to put in the effort to manage the business actively.
ii. FOCO Model (Franchise-Owned, Company-Operated)
Ownership: You invest in vehicles and assets, but the franchisor (cab company) manages the operations.
Operations: The franchisor handles bookings, assigns drivers, manages technology, and ensures service quality.
Revenue: You get a fixed share of revenue or a guaranteed monthly return.
Best for: Investors who want to earn steady income without handling daily operations.
2. Understand Legal & Regulatory Requirements
Business Registration: Choose Sole Proprietorship (small scale), LLP, or Private Limited (recommended for growth).
Permits & Licenses: Get all the necessary vehicle and driver permits approved by your local Regional Transport Office (RTO) before starting operations.
Insurance: Commercial vehicle insurance is mandatory.
3. Calculate Investment & Break-Even
Initial Costs (approx.):
Vehicle purchase/lease: ₹6–10 lakhs per car (or lease for ₹15,000–20,000 /month /car)
Business Registration & permits: ₹50,000–₹1 lakh
Driver salary: ₹15,000–25,000 per month
Technology (if independent): ₹2–5 lakhs for app/website
Marketing: ₹50,000+
Break-even Timeline:
Independent fleet – 24-36 months
Cab franchise – 12-24 months (since you get instant bookings)
4. Build Your Fleet (Smartly)
Don’t buy too many cars at once. Start small, test demand, then scale:
City Travel: Hatchbacks (Dzire, Etios) – fuel efficient
Airport/Corporate: Sedans and SUVs – more comfort
Outstation Trips: Tempo travelers or Innova Crysta for groups
Pro Tip: Consider leasing vehicles instead of buying – this reduces your upfront investment and risk.
5. Technology & Operations
Technology is the backbone of a successful cab business:
GPS tracking & route optimization
Driver app for ride acceptance
Customer app for bookings & payments
Automated invoicing & feedback system
Joining a car hire franchise opportunity like FastTrack solves this instantly, as you get:
A ready-to-use booking app
24/7 customer care
Driver onboarding and training support
Marketing campaigns handled by the brand
6. Hiring & Training Drivers
Hiring the right drivers is one of the most crucial steps in running a successful cab business. Start by recruiting licensed, experienced drivers who hold valid commercial driving licenses and are familiar with your city’s routes. Conduct proper background checks, including police verification, to ensure passenger safety and build trust. Once onboard, invest in training programs that go beyond just driving skills.
Teach your drivers customer service basics like: how to greet passengers politely, maintain cleanliness in the cab, and follow traffic rules strictly. Familiarize them with your booking system or app so they can easily accept rides, manage payments, and handle any issues that may arise during trips. A well-trained driver is not just an employee; they are the face of your business and directly impact customer satisfaction and repeat bookings.
7. Marketing & Customer Acquisition
Getting customers consistently is key to keeping your cabs running profitably. Start by creating a strong online presence, list your business on Google My Business so you show up in “cab near me” searches. Build partnerships with hotels, travel agencies, corporate offices, and event organizers who can provide a steady stream of bookings.
To attract first-time users, offer limited-time discounts or referral bonuses that encourage word-of-mouth marketing. Focus on delivering excellent service, clean cars, punctual drivers, and safe rides so that your customers leave positive reviews and become repeat clients. A mix of online visibility, strategic partnerships, and consistently good service will ensure that your cab business stays in demand and grows steadily over time.
Why Car Rental Franchise Opportunities are the Safest Bet
Starting on your own is challenging – technology, marketing, and brand building take time. A cab franchise - Cab business solves most problems:
Established Brand: Customers already trust the name Guaranteed Bookings: You get access to the company’s customer base Technology Support: App, GPS, payments, and backend are handled Driver Support: Training, onboarding, and compliance help Faster ROI: Break even quicker compared to an independent setup
FastTrack Call Taxi is one of India’s leading taxi brands with:
3Cr+ happy customers
100K+ vehicles across multiple cities
15Cr+ trips completed
This makes it an excellent car rental franchise option for anyone serious about starting a cab business.
Final Thoughts
Knowing how to start a cab business is just step one – executing it well is what matters. If you want lower risk, faster profits, and ready-made technology, explore car hire franchise opportunities with FastTrack.
Your dream of running a profitable cab business in India is just a few steps away – choose the right model, focus on service quality, and watch your business grow.
