As per the rent a vehicle act passed in 1997 , it is legal to operate a Two Wheeler Rental Business in India , but you have the license for it.
There are quite a few formalities that need to be taken care - under the Companies Act, Service Tax registration and other tax related registrations etc. For the bike rental business application with need to be made to the Regional Transport Authority. Section 75 of the Motor Vehicles Act, 1988 provides for Scheme for Renting Motor cabs (which includes motor cycles).