You have built an app. A rider opens it, taps a button, and a car shows up. Or a customer orders food, and a two-wheeler arrives. The technology works. The bookings are coming in. And then someone asks you a question that makes your stomach drop: do you have a licence to do this?
Many people who run app-based transport services in India assume that because they "only run software" and "don't own any vehicles", the law of motor vehicles does not touch them. That assumption can be expensive. Indian law has a specific name for what you are doing, and it comes with a specific permission you are expected to take. This article explains, in plain language, what that permission is, who needs it, and what happens if you skip it.
What Does the Law Mean by an "Aggregator"?
In everyday speech, an aggregator is the company behind the app — the business that connects a customer who wants a ride or a delivery with a driver or vehicle owner who can provide it. You may think of yourself as a "tech platform" or a "marketplace". The Motor Vehicles Act looks at the same activity differently.
The Act treats the aggregator as a kind of canvasser — a person who solicits customers for vehicles. As the law has been explained, an aggregator is a canvasser, and therefore an aggregator falls within the scope of Section 93 of the Motor Vehicles Act, 1988. This is exactly why the Aggregator Rules made by governments are framed under Section 93. The Karnataka High Court took this view in Sajith N. v State of Karnataka (2017), holding that the rules governing aggregators draw their legal force from Section 93.
So the starting point is uncomfortable but important: the moment your app solicits customers and channels them towards taxis, cabs or passenger vehicles, the law is likely to see you as an aggregator — not merely a software company sitting outside the transport world.
Section 93: The Rule in Simple Words
Section 93 of the Motor Vehicles Act is titled "Agent or canvasser or aggregator to obtain licence". The aggregator part was added by the Motor Vehicles (Amendment) Act, 2019, and it came into force from 27 November 2020. Before that, the section only spoke of agents and canvassers; the 2019 amendment brought app-based aggregators squarely into the text.
The section is written in negative language. In plain words, it says: no person shall engage himself as an aggregator unless he has obtained a licence from the authority and subject to the conditions prescribed by the State Government.
"No person shall engage himself ... as an aggregator ... unless he has obtained a licence from such authority and subject to such conditions as may be prescribed by the State Government."
Courts have read this carefully. The Calcutta High Court in Uber India Systems Pvt. Ltd. v State of West Bengal (2022) pointed out that because Section 93(1) is "couched in negative language", the issuance of a licence is mandatory for operation by agents, canvassers and aggregators. This is not an optional registration that you can postpone. The way the law is drafted, you are not supposed to operate as an aggregator at all until the licence is in your hand.
The Two Separate Things You Actually Need
One of the most common mistakes operators make is treating "getting the licence" as a single box to tick. Section 93 actually puts two distinct, mandatory requirements on you, and you need both.
First, a licence from the designated authority. This is the formal permission to operate as an aggregator. Without it, you are operating outside the law, no matter how good your app is.
Second, compliance with the conditions prescribed by the State Government. The licence does not float free. It comes attached to a set of conditions, and you must operate within them. As the courts have put it, obtaining a licence and being subjected to State Government conditions are two separate, mandatory components of the prerequisite for operating as an aggregator. Satisfying one and ignoring the other does not make you compliant.
Think of it like a driving licence: holding the card is one thing, obeying the conditions on which it was issued is another. Both have to be true at the same time.
What Conditions Can Be Attached to the Licence?
Section 93(2) lists the kinds of conditions that can be built into an aggregator or agent licence. Knowing this list helps you budget, plan and avoid surprises. The conditions may include:
- The period for which the licence is granted or renewed — so the licence is time-bound and will need renewal.
- The fee payable for the issue or renewal of the licence.
- A security deposit. For an agent in the business of collecting, forwarding or distributing goods carried by goods carriages, the deposit can be up to fifty thousand rupees. For any other agent or canvasser, it can be up to five thousand rupees. The section also allows rules to spell out the circumstances in which this security can be forfeited.
- The authority and the circumstances under which the licence may be suspended or revoked.
- Such other conditions as the State Government may prescribe.
The purpose behind a security deposit, as explained in the case law, is to make sure that agents and canvassers do not act in a way that is prejudicial to the interests of the travelling public or resort to objectionable means. If you do, you can face suspension or cancellation of the licence, and even forfeiture of the deposit. On the brighter side, an operator is generally entitled to a refund of the deposit when the licence is surrendered.
The Advertising Rule Most Operators Have Never Heard Of
Section 93(3) contains a condition that is built into every licence — and it catches a lot of businesses off guard. It says that no agent or canvasser to whom a licence is granted shall advertise in any newspaper, book, list, classified directory or other publication, unless that advertisement contains three things:
- the licence number,
- the date of expiry of the licence, and
- the particulars of the authority that granted the licence.
If your business model depends on advertising — and most app-based aggregators advertise heavily — this is not a detail you can ignore. The law expects your licence details to travel with your advertisements. Building this into your marketing templates from day one is far easier than retrofitting it after a notice arrives.
You Also Have to Follow the IT Act
Section 93 does not stop at transport law. The second proviso to the section says, in plain terms, that every aggregator shall comply with the provisions of the Information Technology Act, 2000 and the rules and regulations made under it.
This is the law recognising the obvious: an aggregator runs on an app, collects user data, processes digital payments and stores personal information. So your compliance is not only about a transport licence. It also pulls in the entire framework of the IT Act — data handling, intermediary obligations, security practices and more. Two different legal worlds, transport and technology, meet inside Section 93. If you treat your obligations as purely a "transport department" matter, you are seeing only half the picture. Operators who deal with digital payments and user data should also keep an eye on their wider exposure to banking and online-transaction disputes.
Central Government Guidelines vs State Government Rules
Here is a point that confuses many founders. The Central Government has issued guidelines for aggregators. The State Government makes rules and issues the licence. Who actually controls you?
The first proviso to Section 93(1) says that while issuing the licence to an aggregator, the State Government may follow such guidelines as may be issued by the Central Government. Note the words "may follow". The Supreme Court in Roppen Transportation Services Pvt. Ltd. v Union of India (2023) explained that the Central Government guidelines have only persuasive value — they are not mandatory. The State Government may bear them in mind, but the ultimate decision on whether to grant a licence, and on what conditions, rests with the State Government, which exercises its rule-making power under Section 96 of the Act.
In practical terms: the State you operate in is your real regulator for licensing. The Central guidelines are an important reference, but it is the State's rules and the State's licence that decide whether you are legal on the ground. If you operate across multiple States, you may be dealing with multiple sets of conditions.
Is Every App Automatically an Aggregator?
Not necessarily — and the line is genuinely fact-dependent. The case law shows that courts look at what the business actually does, not just what it calls itself.
In one matter, a company argued that it neither sold tickets for travel by public service vehicles nor solicited customers for any particular taxi owner. All it did was forward a customer's request to nearby taxi owners, and it charged the passenger nothing for doing so. On those specific facts, the court took the view that the company did not fall within the ambit of Section 93. The discretion exercised by authorities under aggregator rules, courts have also said, must be exercised reasonably, fairly and in a non-arbitrary way.
But please read that carefully before you celebrate. That outcome turned on a very particular set of facts — no charging of the passenger, no soliciting for a particular operator. The moment your app solicits customers, channels them to vehicles, charges a fee, or behaves like a marketplace for rides, you move much closer to being an aggregator in the eyes of the law. The safer assumption for most app-based taxi, cab and passenger-transport businesses is that Section 93 applies to you, and the burden of showing you are an exception is on you.
What Should I Actually Do Now?
If you run, or are about to launch, an app-based transport service, here is a practical roadmap:
- Honestly classify your business. Ask whether your app solicits customers and connects them to passenger vehicles. If yes, assume Section 93 applies and you need an aggregator licence.
- Identify your State regulator. The licence is granted by the authority designated by your State Government. Find out which department in your State handles aggregator licences and what its current rules say.
- Apply for the licence before you scale. Because Section 93 is written in negative language, the safest position is to have the licence in hand before operating, not after.
- Read the conditions, not just the licence. Note the licence period, renewal fee, security deposit and any operating conditions. Diarise the renewal date.
- Fix your advertising templates. Make sure every advertisement carries your licence number, the date of expiry and the granting authority's particulars, as Section 93(3) requires.
- Build IT Act compliance in parallel. Treat data protection, intermediary duties and digital payment compliance as part of the same project, because Section 93 expressly requires compliance with the IT Act, 2000.
- Check every State you operate in. If you run in more than one State, you may face more than one set of rules and conditions. Do not assume one licence covers the country.
- Keep your paperwork ready. If a notice or query arrives, being able to produce your licence, your conditions and your compliance records quickly makes a real difference. Knowing how to respond to a formal legal notice calmly and on time is part of running a compliant business.
- Get a lawyer to map your exposure once. A single, clear review at the start is far cheaper than firefighting after enforcement action.
Why Skipping the Licence Is a Bad Bet
It can be tempting to launch first and "sort out the paperwork later". The structure of Section 93 makes this a poor gamble. The licence is mandatory, not optional. The conditions are mandatory, not advisory. The advertising rule is built into every licence. And the IT Act compliance obligation sits inside the same section. An aggregator that operates without a licence is, on the plain reading of the law, operating outside it — and that exposure does not improve with time or scale. It usually gets worse, because a bigger operation is a more visible one.
This is the kind of situation where a short conversation early on can save a great deal of money and stress later. At Pinaka Legal, we help app-based operators understand whether Section 93 applies to them, what their State requires, and how to structure compliance so that growth does not turn into a legal problem. Getting this clarity before you scale is one of the most sensible investments a founder can make.
Building on Solid Ground
A great app is a real achievement. But in India, an app that connects customers to passenger vehicles is not operating in a legal vacuum — it is an aggregator, and Section 93 of the Motor Vehicles Act expects it to be licensed, conditioned and compliant. The good news is that none of this is mysterious. The section tells you what you need: a licence, the State's conditions, honest advertising and IT Act compliance. Founders who treat these as part of the build — not as an afterthought — get to grow with confidence instead of looking over their shoulder. Understand the rule, take the licence, follow the conditions, and your business stands on solid ground.
Written by the Pinaka Legal Editorial Team. For queries, call +91 8595704798 or email info@pinakalegal.com.
Frequently Asked Questions
Do I need an aggregator licence if my app does not own any vehicles?
Yes, most likely. Section 93 of the Motor Vehicles Act targets the aggregator — the business that connects customers to vehicles — not the vehicle owner. The law treats an aggregator as a canvasser. Owning no vehicles does not take you outside Section 93 if your app solicits customers and channels them to passenger vehicles.
What exactly is an aggregator under Section 93 of the Motor Vehicles Act?
An aggregator is the operator of the platform that connects a customer wanting a ride or transport with a driver or vehicle. The Act treats an aggregator as a canvasser, and the Karnataka High Court in Sajith N. v State of Karnataka (2017) confirmed that aggregator rules are framed under Section 93. So the app-running business, not just the driver, is regulated.
Is the aggregator licence compulsory or optional?
It is compulsory. Section 93(1) is written in negative language — "no person shall engage himself as an aggregator unless he has obtained a licence". The Calcutta High Court in Uber India Systems Pvt. Ltd. v State of West Bengal (2022) held that this negative drafting makes the licence mandatory for aggregators. You are not meant to operate without it.
Who issues the aggregator licence — the Centre or the State?
The State Government. The licence is granted by the authority designated under State rules, which the State frames using its power under Section 96. The Central Government issues guidelines, but the Supreme Court in Roppen Transportation Services Pvt. Ltd. v Union of India (2023) said those guidelines only have persuasive value. The State decides whether and on what conditions to grant the licence.
What conditions can be attached to my aggregator licence?
Section 93(2) allows conditions such as the licence period, the fee for issue or renewal, a security deposit, and the authority and circumstances for suspension or revocation. It also allows any other conditions the State Government prescribes. You must satisfy both the licence and these conditions — they are two separate mandatory requirements.
Do I have to put my licence number in my advertisements?
Yes. Section 93(3) builds this into every licence. An agent or canvasser cannot advertise in a newspaper, book, list, classified directory or other publication unless the advertisement contains the licence number, the date of expiry of the licence, and the particulars of the granting authority. Build this into your marketing templates.
Does the aggregator licence also involve the IT Act?
Yes. The second proviso to Section 93 says every aggregator shall comply with the Information Technology Act, 2000 and the rules and regulations made under it. Because an aggregator runs an app and handles user data and digital payments, your compliance covers both transport law and technology law at the same time.
Can my app ever fall outside Section 93?
Possibly, but it is fact-dependent and risky to assume. In one case, a company that merely forwarded requests to nearby taxi owners, charged the passenger nothing, and did not solicit for any particular operator was held to fall outside Section 93. But if your app solicits customers, charges fees or acts like a ride marketplace, you are much more likely to be treated as an aggregator.
What happens if I operate without an aggregator licence?
On the plain reading of Section 93, an aggregator without a licence is operating outside the law. The licence and the State's conditions are both mandatory. Operating without them does not become safer as you grow — a larger, more visible operation usually attracts more scrutiny, not less. The safer course is to get the licence before you scale.
I operate in more than one State. Do I need a licence in each?
Quite possibly, yes. The licence and its conditions are prescribed by the State Government, and each State frames its own rules under Section 96. You should not assume that one State's licence covers operations across the country. Check the requirements of every State in which your app operates and plan compliance State by State.
For more articles on Indian law, visit the Pinaka Legal Blog.