By Aditya Kini, Zehn Legal

1. A product of WRI Ross Center for Sustainable Cities in association with Zehn
ADITYA KINI, ZEHN
TRANSPORTATION
IN INDIA
The Law and its Application

2. A product of WRI Ross Center for Sustainable Cities in association with Zehn
THE LEGAL FRAMEWORK
Laws applicable to Motor Vehicles in India

3. FLOW OF LEGAL AUTHORITY
State Rules
Motor Vehicles Act, 1988, while a central legislation permits state governments to make rules in
relation to the grant of permits and registrations to vehicles** However, these must be in consonance with the broad framework created by the Act.
Motor Vehicles Act, 1988 r/w. Allied Rules
Enacted by Parliament (Union) in accordance with Entry 35 Sch. VII
Consolidates law on motor vehicles
Governs motor vehicles and motor vehicle related businesses in India
Constitution of India
Who can Legislate:
Power to Make Laws under Art. 245 and Art. 246 r/w. Sch. VII.
3 Lists under Schedule VII – Union (List - I), State (List - II) and Concurrent (List - III).
Motor Vehicles and other mechanically propelled vehicles fall under Entry 35 of List – III.
This means both Centre and State have power to legislate on matters relating to motor vehicles.
**Sections 65 and 96 of the Act

4. MOTOR VEHICLES ACT, 1988
• Transportation in India is primarily governed by the Motor Vehicles Act, 1988, the
Central Motor Vehicles Rules, 1989 and various state rules.
• The Act creates two levels of regulation at the Central and State Levels.
• The Central Government governs the kinds of registrations and permits that may be
granted in relation to the intended use of the vehicle.
• The State Government governs the grant of permits to vehicles under the framework
of registrations/permits created by the Central Government and also creates licenses
for operation of such permits.
• Exception – Rent a Motor Cab/Rent a Motorcycle Schemes – License created by
center and granted by state.

5. ROLE OF THE CENTRAL GOVERNMENT
Central
Government
Creation of
Framework for
Regulation of
Motor Vehicles
Creation of
Categories of
Registrations
and Permits
for Vehicles
Usage of
Motor Vehicles
for
International
Travel
Framework for
Insurance
Requirements
for Motor
Vehicles
Creation of
Tribunals to
address to
claims under
the Act
Definition and
Structuring of
Offences
under the Act

6. ROLE OF THE STATE GOVERNMENT
State
Government
Implementation
and Enforcement
of Laws Created
by Central
Government
Control of Road
Transport within
the State
Grant of
Registrations and
Permits created
by the Central
Government
Creation and
Implementation of
License and
Permit
Conditions,
including fares
Creation of
Framework for
Licenses to be
granted to
Transport
Businesses
Taxation of Motor
Vehicles

7. A product of WRI Ross Center for Sustainable Cities in association with Zehn
KEY CONCEPTS UNDER
THE MOTOR VEHICLES
ACT, 1988

8. KEY CONCEPTS UNDER THE ACT
• It is important to fully understand the scope and applicability of the Act to determine
the best way forward for businesses (tech or non – tech oriented) that aim to provide
or facilitate transportation services.
• The Act clearly lays out definitions for kinds of vehicles and their intended uses along
with specific forms of registrations/permits to be granted to vehicles, which in turn,
are used for licensing purposes by states.
• Important to remember that licensing of operators changes state to state under
relevant schemes as it is the generally the role of the state to determine the licensing
of operators.
• The Act also lays down specific requirements to be fulfilled under each registration/
permit.

9. TRANSPORT AND NON - TRANSPORT VEHICLES
Section 2(47) of the Act
Transport Vehicles
• Transport Vehicle includes a
Public Service Vehicle, a goods
carriage vehicle, a private
service vehicle or educational
institution bus.
• A transport vehicle is a vehicle
used for carriage of passengers
and goods.
Non – Transport Vehicles
• Non – Transport on the other
hand relates specifically to
personal use.
• A Non – Transport Vehicle may
not be used as a Transport
Vehicle, i.e., for a commercial
purposes.
Vehicles under the Act are broadly classified into “Transport” and “Non - Transport” vehicles.

10. UNDERSTANDING THE DIFFERENCE
• X recently purchased a new car that he
uses every day to drive himself to and
from his office. The car is registered as a
“white board” vehicle meant for private
use. Can X pick up and drop off a
passenger travelling in the same direction
every day and charge him a fee to cover
his fuel costs?

11. PUBLIC AND PRIVATE SERVICE VEHICLES
Sections 2(33) and 2(35) of the Act
“Hire or reward” refers to any form of consideration paid by the passenger for his carriage.
Public Service Vehicle
• A Public Service Vehicle is a Motor
Vehicle adapted for the use of
carriage of passengers.
• Public Service Vehicles are generally
engaged for Hire/Reward.
• Includes maxi cab, motor cab,
contract carriage and stage
carriage.
Private Service Vehicle
• A Private Service Vehicle is a motor
vehicle adapted for carriage of
more than 6 passengers utilized by/
on behalf of the owner for carriage
of persons for or in connection with
his trade.
• A Private Service Vehicle cannot be
engaged for hire/reward and cannot
be engaged for public purposes.

12. UNDERSTANDING THE DIFFERENCE
• Mr. A operates a factory on the outskirts of
Bengaluru. To help workers with their daily
commute to the factory, Mr. A purchases a 12 –
seater vehicle to pick up and drop off his
workers every day. The vehicle is registered as
a transport vehicle. On the weekends to earn
some extra money on the side, Mr. A uses this
vehicle to pick up and drop off passengers
unrelated to his factory. Is this legally
permissible?

13. MOTOR AND MAXI CABS
Sections 2(22) and 2(25) of the Act
Motor Cab
• A Motor Cab is a Motor
Vehicle constructed/
adapted to carry not more
than 6 passengers
excluding driver.
• Motor Cab is generally
engaged for hire or reward.
Maxi Cab
• A Maxi Cab is a motor
vehicle constructed/
adapted to carry between 6
– 12 passengers.
• A Maxi Cab is also generally
engaged for hire or reward.

14. PERMITS AND LICENSES
Section 2(31) of the Act
Permits
• A Permit is granted by a state
or regional transport authority
permitting use of a vehicle as a
transport vehicle.
• Granted based on the
INTENDED USE of a motor
vehicle
Licenses
• A Operator’s License is not the
same as a Permit. Licenses are
granted to an operator to
CONDUCT A BUSINESS OR
OPERATE A VEHICLE
• Operators must still obtain
permits for vehicles to be used
commercially otherwise it is
illegal for them to do so.

15. CONTRACT CARRIAGE
Section 2(7) of the Act
Contract Carriage
refers to a motor
vehicle that carries a
passenger/s for hire
or reward. Includes a
motor cab and maxi
cab
It is a vehicle engaged
under a contract by
passenger for a fixed
or agreed rate.
Rate may be time
based or point to
point.
Cannot stop to pick
up/set down
passengers during a
journey.

16. STAGE CARRIAGE
Section 2(40) of the Act
Stage Carriage
refers to a motor
vehicle that carries
more than 6
passengers for
hire or reward.
Separate Fares
Charged to each
passenger.
Fare paid either
for whole journey
or stages.
Can stop to pick
up/set down
passengers during
a journey.

17. GOODS CARRIAGE
Section 2(14) of the Act
Goods Carriage refers
to a motor vehicle
that is adapted/
constructed to carry
goods.
Includes vehicles that
are utilised for
carriage of goods
even if not
constructed/adapted
for that purpose
Goods refer to
livestock or anything
carried by a vehicle
other than living
persons.
Does not include
personal effects,
luggage.

18. UNDERSTANDING THE DIFFERENCE
• Z owns a Swift Dzire. The vehicle has been granted a permit to
operate as a contract carriage within the limits of BBMP. Z also
possesses a commercial badge on his driving license. Z picks up
a passenger ‘A’ near MS Ramaiah Hospital to be dropped off at
Lavelle Road, Bangalore for a charge of INR 100. On the way, Z
picks up passenger ‘B’ in Sadashivnagar to be dropped off at
Chinnaswamy Stadium for a charge of INR 80. At Chinnaswamy
Stadium, Z picks up ‘C’ to be dropped off at Bowring Club for a
charge of INR 30. Is it permissible for Z to do this so long as he
maintains his contract carriage permit?
• Z also utilises the vehicle to do food and grocery deliveries
once in a while. Is this legally permissible?

19. TOURIST VEHICLES
Section 2(43) of the Act
A Tourist Vehicle is a
form of Contract
Carriage.
Generally used for
ferrying of tourists to,
from and between
tourist locations and
promotion of tourism
within a state/country.
General objections
towards using tourist
vehicles as general
taxis.

20. A product of WRI Ross Center for Sustainable Cities in association with Zehn
MOTOR CYCLES AS
CONTRACT CARRIAGES

21. MOTOR CYCLES UNDER THE ACT
• A Motor Cycle is defined under the Act to mean a two – wheeled Motor
Vehicle.
• Since Motor Cycles are included within the ambit of a Motor Vehicle, they may
be classified as a Motor Cab if the intended use is commercial.
• Motor Cycles would hence qualify for grant of individual contract carriage
permits.
• However, most State Governments are either reluctant or have out-right
refused to grant individual contract carriage permits to Motor Cycles citing
safety, security, enforcement and insurance related concerns.

22. RENT A MOTOR CYCLE SCHEME
• The Rent a Motor Cycle Scheme, 1997 was issued by the Central
Government in exercise of its powers under Section 75 of the
Act.
• The Rent a Motor Cycle Scheme grants licenses to operators
and further provides for the grant of contract carriage permits
to motor cycles operating under a Rent a Motor Cycle License.
• These, however, cannot be utilised as bike taxis for point to
point pick ups and drop offs. They are meant for an individual’s
own use and must either by driven by the individual or a driver
appointed by him.
Section 75 of the Act gives the Central Government the power to formulate a
scheme for renting of motor cabs and motor cycles by individuals for their own use.

23. INDIVIDUAL CONTRACT CARRIAGE PERMITS
• As stated before, there are very few states that allow for the
grant of individual contract carriage permits to motor cycles.
• As of now, only Haryana has issued an order for the grant of
individual contract carriage permits to motor cycles.
• Gujarat, West Bengal and Rajasthan are currently considering
granting individual contract carriage permits to motor cycles.
• Other states have refused to grant individual contract carriage
permits.

24. A product of WRI Ross Center for Sustainable Cities in association with Zehn
INSURANCE
REQUIREMENTS FOR
MOTOR VEHICLES

25. INSURANCE UNDER THE ACT
• The Act requires that any motor vehicle being used in a public
place in India be covered by an Insurance Policy in accordance
with the Act.
• The requirements specified under the Act are only the minimum
requirements.
• Insurers generally distinguish between insurance coverage for
private vehicles and commercial vehicles.
• Commercial Vehicles are required to obtain more comprehensive
insurance coverage than private vehicles.
Chapter XI of the Act.

26. GENERAL REQUIREMENTS FOR MOTOR VEHICLE
INSURANCE
• Motor Vehicles are required to obtain insurance coverage
at minimum for liability for death, bodily harm, harm to
goods, injury to third parties, damage to property of a
third party.
• However, the Act requires Commercial Vehicles to also
obtain coverage for death or bodily injuries to passengers
in addition to the above.
• Insurance coverage for commercial vehicles may also
include insurance coverage for workman’s compensation.

27. A product of WRI Ross Center for Sustainable Cities in association with Zehn
PEER TO PEER
RIDESHARING

28. WHAT IS PEER TO PEER RIDESHARING?
• The concept of sharing a vehicle permitted solely for
private use for a trip by splitting travel costs such as fuel
and toll is known as ridesharing.
• Passengers are generally picked up and dropped off on
the way depending on routes and schedules.
• In essence, is the commercial utilisation of a transportation
asset, whether commercially licensed or otherwise.

29. IS PEER TO PEER RIDESHARING LEGAL IN INDIA?
• Under existing laws, Peer to Peer Ridesharing is unregulated and hence deemed
illegal in India.
• Transport authorities generally view it as a violation of the permit granted to a vehicle
since it is a private vehicle being utilised for commercial purposes without having
obtained requisite permissions from the transport authorities.
• Other than a violation of permits, State Governments as well as the Central
Government are reluctant to provide legitimacy to the idea since it poses an
enforcement issue.
• Another concern is a drastic alteration to insurance requirements. Since private
vehicles do not possess the same insurance coverage that a commercial vehicle does,
harm to passengers is a major concern.

30. USING CONTRACT CARRIAGES FOR RIDESHARING
• While it would make sense that a commercially licensed contract carriage vehicle
be permitted to conduct ridesharing, transport authorities are unwilling to permit
the same.
• This stems mostly from the fact that this would be a violation of a contract carriage
permit.
• The contract carriage permit does not allow a contract carriage to pick up and
drop off passengers along the way. Contract carriages cannot engage several
different contracts at the same time.
• This would, in the eyes of transport authorities, mean that contract carriages are
acting as stage carriages – hence being a violation of the permit granted to it.

31. COULD THE REGULATORY ENVIRONMENT CHANGE?
• Governments are slowly waking up to environmental, congestion and traffic concerns plaguing
cities in India.
• Now, if ever, is the best time to push for Governments to seriously consider allowing peer to peer
ridesharing as a means of combating environmental, health, infrastructure and traffic concerns.
• In fact, a change in mindset could take place, in view of the Motor Vehicles (Amendment) Bill,
2016, recently introduced in Parliament.
• The Bill specifically allows state governments to formulate policies that help in reduction of traffic
congestion, increasing last mile connectivity, improvement of urban transport, promotion of
energy conservation and better utilisation of transport assets.
• This could give impetus to the Ridesharing cause and could be utilised to make a serious push
with State Governments to study, trial and permit peer to peer ridesharing in India.

32. THANKS!
Any questions?
You can find me at:
aditya.kini@zehn.in
+91 99025 80203