How to Start Petrol Pump Business in 2022?

Petrol Pump business is undoubtedly considered as one of the leading profit-making ventures in India and even globally. The primary reason is its never-ending and ever-increasing demand by the transportation and logistics sector and especially for daily commuting purposes. Though it requires lots of paperwork and legal formalities to be fulfilled, still it stands amongst the top income-generating businesses across the nation.

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Petrol pumps’ license and the franchise are required to be obtained from any one of the public and private sector Oil Marketing Companies (OMCs) that include Bharat Petroleum Corp. Ltd. (BPCL), Indian Oil Corp. (IOC), Hindustan Petroleum Corp. Ltd. (HPCL), Reliance Petroleum Ltd., Essar Oil Ltd., Indraprastha Gas Ltd. (IGL), Oil and Natural Gas Corp. Ltd. (ONGC) and many more.

As per the advertisements from the OMCs, opportunities shall be generated to open petrol pumps in 2021. The process involved in starting a petrol pump business is not known by many people; therefore let’s discuss some of the important information to open a petrol pump in India.

1. Eligibility to start a Petrol Pump

• Age Criteria: Applicant should be a minimum of 21 years and a maximum of 55 years
• Applicant must be an Indian citizen, in the case of NRI the applicant must have stayed in India for more than 182 days
• Birth Certificate Proof: 10^th class mark sheet
• Education Qualifications: For the General category, he/she should be 12^th pass and for SC/ST/OBC category the applicant should be at least 10^th pass
• For opening a petrol pump in urban areas the applicant should be a graduate
• Minimum education criteria are not applicable for freedom fighters under the CC2 category
• Minimum investment amount: Rs. 15 lakh onwards for dealerships in rural areas
• Maximum investment amount: Rs 2 crore or more for dealerships in urban areas
• The business area should not be in blacklisted or excluded zones

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2. Investment required to start a Petrol Pump

To open a petrol pump in rural areas, the applicant needs to have funding of minimum Rs. 15 – Rs. 20 lakh. Whereas, for opening petrol pump in urban areas the investment amount can go up to Rs. 30 – Rs. 35 (if the land is self-owned). Besides cash and jewelry, applicants can use the below-mentioned types of funds for opening a petrol pump:

• Bank deposits
• Bonds and shares
• Fixed Deposits
• Mutual Funds
• National Saving Certificates
• Postal Scheme
• Saving accounts

Note: Only 60% of value shall be considered for mutual funds, bonds, and shares.

Also read: How To Write a Business Plan To Start Your Own Business

3. Land Required

Applicant must have land under his/her own name or areas where land can be taken on lease for a longer tenure, as per the notification. There are two types of retail outlets that can be opened as per the location that is as follows:

i) Regular Retails Outlets: On National and State highways; Urban and Semi-urban areas

ii) Rural Retail Outlets: Land in rural areas but not on national highways

Ideally, the area of 800 sq. meters – 1200 sq. meters is suitable for opening a petrol pump.

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4. Fees and Charges

License Fees

1. 16/KL for high-speed diesel for ‘B’/’DC’ retail outlet’s site and Rs. 18/KL for motor spirit
2. 41/KL for high-speed diesel for ‘A’/’CC’ retail outlet site and Rs. 48/KL for motor spirit

Also Know: Which is the best bank for a business loan in India? Compare Interest Rates

Application Fees

The applicant is required to deposit an application fee of Rs. 1000 for regular retail outlets and Rs. 100 for rural retail outlets. SC/ST/OBC category people are offered a 50% concession on the application fees.

Fixed Fees

If an applicant owns the land for the same purpose and in the respective area then he/she is required to pay Rs. 15 lakh for regular retail outlets and Rs. 5 lakh for rural retail outlets. For a company-owned dealership, the applicant needs to pay fees of Rs. 10 lakh for the rural sites and Rs. 30 lakh for a regular site.

Note: The application, fixed and license fees are non-refundable.

Also Read: What is Gumasta license?

5. Applying for a Dealership

Leading Oil Marketing Companies (OMCs) publish advertisements in the newspaper or online related to their plans of setting up numbers of petrol pumps in various cities and locations of the country. Applicants can apply online by visiting the OMC’s official website for opening a dealership in their desired location or area or can write in at the mentioned address published in the advertisement.

If there are lots of applicants applying for the same area or location then OMCs announces names of winners via a lottery system, lots, or bidding process. 

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6. Certificates and Permissions

To open a petrol pump, an applicant needs to obtain certain certificates and permissions in order to run his/her dealership without any hassle and tension. A few of these include:

• Location’s Certified copy
• No Objection Certificate (NOC) from Licensing Authority
• Permission from the Municipal Corporation Department (MCD) & Fire Safety Office
• Certification and NOC from related authorities

The location of a petrol pump is the key aspect in the success or failure of a business. Petrol pumps should be preferably set up at busy national or state highways, residential areas, popular markets, and alongside roads with higher traffic. Post obtaining the license, the applicant needs to install a petrol pump and oil bunkers, according to the OMC’s specifications and guidelines.

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FAQs on Petrol Pump Business

Q. Which petrol pump dealership is most preferred by the business owners?

Ans. Indian Oil is considered to be India’s biggest and most profitable oil company. However, it depends on the customers which dealership is giving them more benefits as compared to the rest. Petrol pump dealerships can be obtained from various leading companies that include Indian Oil, Bharat Petroleum, Hindustan Petroleum, Reliance Petroleum, Shell, Essar Oil, ONGC, etc.

Q. How can I start a petrol pump business in India?

Ans. To start a petrol pump in India, a business owner needs to clear the eligibility criteria defined by state authorities, needs to show working capital to be invested, should be between 21 years to 55 years of age, and should have at least cleared XII standard in studies.

Q. How do I get a petrol pump license?

Ans. The license to own and operate a petrol pump can be obtained by state authority, as per the location of petrol pump and permission from Municipal Corporation Department of that particular state along with NOCs and copy of location’s certificate.

Q. What is the minimum investment required in starting a Petrol Pump business?

Ans. The minimum investment required to start a petrol pump is minimum Rs. 15 lakh and the maximum can exceed up to Rs. 35 lakh, depending upon the location of retail outlet.

Q. What is the commission of petrol pump dealerships?

Ans. The commission of petrol pump dealership varies from agency and location. However, the general commission ranges from Rs. 2 to Rs. 5 per litre and nearly half of the amount paid on petrol per litre is tax, commission, and duty.

Q. What is the cost of a petrol pump license in India?

Ans. The license cost of petrol pumps in India ranges from Rs. 18/KL – Rs. 48/KL for motor spirit depending upon the category of retail outlets (A, B, CC, DC)

Q. Which petrol bunk is considered best in India?

Ans. It is difficult to suggest anyone petrol bunk out of many, as customers have their own preference and have benefits attached as per their usage or vehicle consumption.