The RC crisis in India Explained

Imagine this, you sell your car. You receive the money. The vehicle leaves your driveway. In your head, the job is done and you’re getting ready to welcome your next car!

A week, or a month later, you find the local police at your doorstep questioning you about a car you already sold because it was identified as having committed some violation somewhere. You try explaining this to the officer but they point right back at the vehicle ownership record (registration certificate/RC) which continues to bear your name. That is when you realise, to your astonishment, that law still holds you liable for the car until the RC transfer paperwork is completed. 

This is the reality of vehicle ownership in India today, and it sits at the heart of one of the biggest trust gaps in the used-car market. You can do your part, find a good used-car dealer, a buyer, ensure all the paperwork is in order to the best of your knowledge but you remain a prisoner to regulation which acknowledges the sale at its own pace, if at all. 

This is not a niche issue. It is a structural one which we have experienced in the used-car ecosystem for many years - used cars change hands faster than ownership transfer records. For ordinary citizens, the consequences of this unnecessarily complex regulatory framework include prolonged uncertainty, repeated follow-ups, administrative friction, and in the worst cases, exposure to fines, disputes, accidents, or even criminal misuse linked to a vehicle they no longer possess. 

India’s used-car market has grown into a major mobility and economic engine. It supports affordability, entrepreneurship, financing, logistics, and a large ecosystem of small businesses and intermediaries. But the transfer framework has not kept pace with how the market now functions in practice. The old assumption was simple: one individual sells directly to another individual and the transactions were largely local. But the modern used-car market does not operate that way at scale. It works largely through dealers and organized intermediaries and inter-state movement of used vehicles (especially from Tier 1 cities to Tier 2 cities) is increasing. This distinction is fundamental.

This distinction matters because in a process which is already fragmented, not time-limited and involves multiple stakeholders, when you add yet another intermediary like an individual dealer or a platform like ours, and one more state authority, new process complications may arise and the turn-around-time for every transaction increases, thereby increasing the scope and duration of the the seller’s risk. 

For too long, the regulatory and operational framework did not consistently reflect that commercial reality, until in December 2022, the Ministry of Road Transport & Highways (MoRTH) in a welcome respite to the industry and citizens at large, amended the Central Motor Vehicle Rules, 1989 (CMVR) through G.S.R. 901(E). 

The amendments introduced the concept of an “Authorized Dealer of Registered Vehicles” (ADRV), recognizing that used-car dealers are not incidental participants in these transactions; they are central actors. Accordingly, a proper registration process for authorised dealers was developed on the VAHAN portal and their powers and responsibilities were defined. Most important among those powers and responsibilities is becoming “deemed owner” of those vehicles whose sale has been facilitated by them. That matters for three reasons.

First, it protects the seller. Once a seller has sold their vehicle, the seller/authorised dealers must report the transaction on the VAHAN portal, legally recording the handing over of the vehicle’s possession and its documents. This immediately absolves the seller from all legal liabilities associated with that vehicle thereafter such as challans, accidents, misuse etc. 

Second, it assigns responsibility more rationally. The dealer in possession of the vehicle is the party best placed to bear and discharge the relevant responsibilities during that interim stage while the RC transfer paperwork is still underway.

Third, it improves traceability. A system that clearly records who is responsible for a vehicle at each stage is better for consumers, the industry, and public enforcement alike.

In other words, the deemed ownership framework is not simply an industry convenience, it is an exercise in good governance!

At Cars24, we have seen first-hand why this matters. We have also seen how difficult the existing RC transfer process can become when rules differ across jurisdictions, documentation requirements vary, physical appearances are demanded and the transfer journey remains unclear or inconsistent. The challenge is not only the central rulebook. The challenge is also how unevenly it plays out on the ground.

That is where the next phase of reform becomes critical.

The intent of G.S.R. 901(E) was progressive. But implementation across states remains inconsistent. As on date, less than 2,000 authorised dealers are registered on the VAHAN portal across the 18 states which have begun accepting authorised dealer registration applications. In some places, the process has moved forward, in others, interpretation, registration readiness, process design, and transfer mechanics are still incomplete. For consumers and the industry, that means the benefit of reform is often determined by geography and convenience rather than principle.

This is exactly why Cars24 has been actively advocating for further change.

We have been early adopters of these enabling regulations since their introduction. We have taken the lead in registering ourselves and our dealer partners in every state which is currently able to accept registrations and where we operate. That means, we are already recognised as authorised dealers in 6 states with registrations applications pending for government approval in 12 more. Based on our experience we have been advocating for a simpler authorised dealer registration process with reduced operational burden on authorised dealers to improve adoption of these rules within the used-car ecosystem.

We have also been working with multiple state governments as well MoRTH to overhaul the complex RC transfer rules in favour of more uniformity, more digitization, and time-bound processes. That includes the end-to-end transaction journey of a vehicle as it changes possession from the seller to the authorised dealer and eventually the buyer. We document transaction-level feedback for our policy makers to help them develop better regulation which works for all of us.

The broader point is simple.

India’s used-car ecosystem cannot be governed as though every transaction is still a one-to-one sale between two individuals managing a stack of papers and an RTO visit. The market has changed. The buyer journey has changed. The seller’s expectations have changed. The law has begun adapting, now implementation must catch up.

When reform works, the benefits go beyond faster paperwork. Consumers get more certainty. Sellers get better protection. Dealers get clearer responsibility. Regulators get stronger traceability. And the used-car ecosystem becomes more trustworthy.