Petrol Pump Business [How To Start, Investment]

. 10 min read
Petrol Pump Business [How To Start, Investment]

Table of Contents:

1. How To Start A Petrol Pump Business?

2. Petrol Pump License: Eligibility Criteria

3. Investment Required To Start Petrol Pump

4. Minimum Land Required For Petrol Pump

5. Petrol Pump Dealership Business

6. Petrol Pump Franchise In India

7. Fees & Permits For Petrol Pump License

1. How To Start A Petrol Pump Business?

Starting a Petrol Pump is one of the most profitable businesses, especially when it’s located in busy places such as highways or cities. With the rising number of automobiles in India, the demand for petrol pumps is also increasing. Apart from this, when paired with restaurants, hotels, or general stores they can help with extra income. But first, let us understand how to start a petrol pump in India

2. Petrol Pump License: Eligibility Criteria

If you’re an entrepreneur and opening a petrol pump is your startup idea, the first thing you need is a petrol pump license. Here are the eligibility criteria you must pass to do so.

  1. You must be a citizen of India and between 21 to 55 years old. An NRI must reside for a minimum of 6 months in India before applying.
  2. The Education requirements differ under the caste system.
  • A general category applicant must be 12th pass.
  • Others (SC/ST/OBC) must be 10th pass to open an outlet in a rural area.
  • A general category applicant must have a University degree to start the business in an urban area.

3. Investment Required To Start Petrol Pump

If you pass the aforementioned criteria the next stage is to prove to have minimum funds to start a petrol pump. Although the requirements may vary from place to place, a general rule of thumb is to prove the ability to invest a minimum of Rs 13 lakh for rural areas and at least 25 lakhs for Urban areas. Here is a list of Funds that WILL be considered:

  • Funds in savings Account
  • Bonds, Mutual Funds, and Shares (only 60% is considered)
  • National Savings Certificate

Here is a list of funds that WILL NOT be considered:

  • Cash, Jewellery, material assets, etc.
  • Funds in a current account.

If you qualify for all the steps mentioned above you can apply for a petrol pump license.

4. Minimum Land Required For Petrol Pump

If you have a land of your own, great. If not, you can take land on a long-term lease and produce a No Objection Certificate signed by the owner. You need a Long-term lease to compensate for the heavy investment that you’ll make in the beginning. Once the location is decided, the petrol pump, AKA, retail outlets are classified into two categories. Lands on and close to National Highways – Urban and semi-urban areas. These are called Regular Retail Outlets.

Lands nowhere near National Highways – Rural areas. These are called Rural Retail Outlets. Irrespective of the names, the required area of the land will be specified in the advertisement by the Oil Marketing Company (OMC) of your choice. Generally, a land of 800 square meters is the minimum requirement. Once you apply to a company and get selected, there are certain brick and mortar constructions you’ll need to make on the site to start a petrol pump. For example, a solid and levelled road for the vehicles to enter and exit, a compound wall, and safety measures in case of fire hazard.

5. Petrol Pump Dealership Business

Theoretically once you check all the boxes and are ready to make the investment, let’s go about the procedure to apply for the license and choosing an Oil marketing company that is best for business. The application form costs Rs 1000 for urban areas and Rs 100 for rural areas, for applicants of the general category. Others get a 50% concession on the form.

To apply for a dealership head over to any Oil Marketing company’s website and you can see ads posted looking for dealerships in various areas. We won’t recommend any brand in particular since most times you’ll have limited options. For example, it is highly unlikely to have two outlets of the same brand close to each other.

Oil marketing companies are constantly posting ads on newspapers and online looking for land and/or dealers to open a retail outlet but it’s best if you visit their official website and check their guidelines for doing such businesses. The information varies depending on the potential location of the Petrol pump. A separate link is produced for every required site in different places. Information for Maharashtra will be different from information for Karnataka. It also depends on rural and urban areas.

6. Petrol Pump Franchise In India

Once you see an ad like this: “Requirement of Land for Retail Outlet (Petrol/Diesel Pump) in the state of Madhya Pradesh”

Click on the link and you’ll get a detailed sheet explaining the precise requirements of the site. It will also list out specific locations where the demand for fuel is great or busy traffic is projected. If you meet all the requirements you can apply for a dealership. When the oil marketing company has a large number of applications, it declares the name of the winner through the lottery or bidding system. The results will also be posted on the website.

It looks like this: List of eligible applicants of Rural Retail Outlet Dealership at Chandpura Sheekampur (Sheekampur to Dariyal Road on RHS). Once you get to this stage where you are ready to start construction on the site, there is a certain Fixed fee you have to pay before it.

  • If you (dealer) own the site (DC), the fixed fee is Rs 15 lakh for Regular retail Outlet and Rs 5 lakh for Rural Retail Outlet.
  • If the company owns the site (CC), the fixed fee is Rs 30 lakhs for Regular retail Outlet and Rs 10 lakh for Rural Retail Outlet.
How to get Petrol Pump License?

7. Fees & Permits For Petrol Pump License

We are talking about the former scenario only in this article. Referring to the requirement sheet you can start construction. It also mentions the dimensions of the tank and area of the site. After You get a Petrol Pump license you need a GST Index Number (GSTIN) to open a current account in the name of the company.

Finally, the License fee for the Petrol Pump. If you sell petrol, you’ll obviously sell diesel too. Here is the fee list. The license fee for a petrol pump dealership is Rs. 18/KL for Motor Spirit (MS is also known as Gasoline) and Rs.16/KL for High-Speed Diesel (HSD) for dealer-owned “B”/“DC” site Retail Outlets. Rs 48/KL for Motor Spirit and Rs.41/KL for High-Speed Diesel for a corporation owned “A”/“CC” site Retail Outlets.

Also read:

1) Welding Business
2) Laundry Business
3) Clothing Store Business
4) Wedding Planning Business
5) Cold Storage Business

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Q. Is petrol pump business profitable in India?

Ans- Yes, petrol pump business in India is a highly profitable sector. The commission per litre including the number of vehicles filled monthly could easily take your monthly profits up to 4 Lakh Rupees.

Q. How much should I invest in petrol pump?

Ans- The total investment required to start a petrol pump business in India you need around 25 to 30 Lakh Rupees for metropolitan cities and 14 Lakh Rupees for Rural or village areas.

Q. How do I start a petrol business?

Ans- The eligibility criteria for petrol pump dealership in India you've to follow these steps:

  • Analyse the investment required to start petrol pump
  • Monitor the cost of starting a petrol pump in India
  • Check the criteria for minimum land required for petrol pump
  • Get your petrol pump license and fill your fees
  • Meeting all your eligibility criteria for petrol pump dealership
  • Get all your certificates and permissions to confirm your dealership

Q. How much does it cost to set up a petrol station?

Ans- To calculate the investment and fees needed to start a petrol pump business in India, you must know the type of area you want to open your gas station. There are two types of petrol pump RO's in India:

  1. Urban- 25 Lakhs
  2. Rural- 12 Lakhs

Q. What is the eligibility criteria for petrol pump dealership in India?

Ans- The eligibility criteria for petrol pump dealership in India are as follows:

  • The age criteria for the applicant should be between 21 to 55 years.
  • The applicant should be an Indian citizen, in the case of an NRI Citizen, He/She should have stayed in India for at least 182 days before applying.
  • You need your 10th Std Mark sheet as Birth Certification Proof(for rural areas).
  • For the urban area, you should hold a Graduate Degree.
  • Minimum education criteria are NA for freedom fighters under the CC2 category.
  • The minimum investment amount for a dealership in rural areas starts from Rs. 15 Lakhs.
  • The maximum investment amount for a dealership in urban areas goes up to 2 Crore Rupees.
  • Business should not fall in excluded zones or blacklisted areas.

Q. How much land is required for a petrol pump?

Ans- To start a petrol pump business in India an area of 800 sq. meters – 1200 sq. meters is suited best.

Q. Which company Petrol is best?

Ans- The top 6 brands of petrol pumps in India is are as follows:

  1. Indian Oil Corporation
  2. Shell
  3. Reliance Petroleum
  4. Hindustan Petroleum
  5. Bharat Petroleum
  6. Essar Oil

Q. Is petrol pump license transferable?

Ans- A petrol pump license in India cannot be transferred. Although it can be surrendered via withdrawal in case of an individual possessor or a proprietor may resign from the dealership of a partnership firm.

Q. How can I get Indian Oil petrol pump?

Ans- To get an IOCL Petrol Pump Dealership you need to fill the Application Fee for IOCL Retail Outlet Dealership:

  • A Fee of Rs.100 in respect of Rural ROs in addition to the fee for SC/ST applicant is Rs.50 in respect of Kisan Seva Kendra.
  • For a regular IOCL ROs application, a nominal fee of 1000 Rupees has to be paid. For SC/ST category the fee charge is 500 Rupees.

Q. How much does a petrol pump owner earn?

Ans- A petrol pump owner in India can earn up to Rs 3,58,000 every month. If your commission comes across as 3 Rupees per litre then your monthly gross earning of 5,70,000 Rupees.

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